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Jul 19

Proactive ways to spend your tax return

by Lachlan Hayes
Wise ways to spend your tax return

While it’s always exciting to stumble into some money, the excitement can make it easy to thoughtlessly throw it away on impulse purchases. If you’re expecting a large tax return (or you’ve already received yours) and want to do something more constructive with it instead, then you’ve come to the right place! So what are some wise ways to splash some cash if you get a return from the ATO?

Pay down your debt

One of the best things you could do with your tax return (financially speaking), is to get a jump on repaying any debts you may have. If you have a number of different debts hanging over your head and you’re not sure where to start, a good rule of thumb is to attack the debt with the highest interest. If you have a payday loan, consider starting by paying that off before moving onto your credit cards and then personal loans. If you’ve only got a mortgage, consider putting down a lump sum payment to get ahead. Just make sure you speak to your mortgage provider first, in case there are any fees involved with paying a portion of your mortgage in advance.

Boost your emergency fund

If you don’t have any debts to pay off or you’d just rather put your money elsewhere, you could top up your emergency fund. If you don’t have one, why not get started? By setting up your emergency fund you’ll be able to avoid being caught off guard by an unsuspecting bill. Having a car suddenly break down or a pipe burst in your home can easily put yourself in a position where you may need to take on some debt in order to pay for repairs. Having an emergency fund will seriously help you break out of the debt cycle and keep you on your feet financially! A good rule of thumb for an emergency fund is to aim to have 3 months’ worth of living expenses saved up, so contributing your tax return can give you a huge leg up.

Let it grow

Since you shouldn’t dip into your emergency fund unless there is a genuine money concern, if you want to have your money available for the future, just put it in a savings account! If you’re a little extra savvy you could even invest it but the objective is the same – let your money make money for you. When you leave a large chunk of money alone for some time, you’ll be able to enjoy the fruits of having compound interest working in your favor instead of against you like it does with a debt!

Spend it on something that you (actually) need.

As soon as we find some extra cash burning a hole in our pocket it’s very tempting to go out and purchase a bunch of things that you want, but if you want be a bit wiser with your money, try to spend it on something you need! Sure it may not be as much fun, but you could end up saving considerable money in the long run. If your car is making a funny noise, or you have a small leak in your house, get it repaired before it becomes an even bigger and more expensive problem that requires you to dip into your emergency fund!

Pay your bills in advance

Another way you can set yourself up to have a little more free cash throughout the year is by paying all your little bills upfront. Things like your phone, Spotify and Netflix are usually only small charges that can just come directly out of your bank account but they do add up! Getting them out of the way now for the whole year means that you don’t have to worry about making sure money is in your account for these bills and can make it easier to budget, you’ll also find yourself with a little bit more free spending money in your paycheck.

Next steps

Hopefully now you’ve got an idea of what you could do with your tax return but don’t make a decision right away. Make sure you take some time to consider all of your options, especially after you do get your return, so that you make a thoughtful decision that will truly help you out.


The information provided in this blog is general advice only. It has been prepared without taking into account any person’s individual objectives, financial situation or needs. Before acting on any information in this blog you should consider its appropriateness to you, having regard to your objectives, financial situation and needs.