Sometimes spending money wisely can be a challenge, especially tax refunds, which can seem like free money. If you’re lucky enough to get a tax refund this year, take a moment to think about how you could put that money to work for you.

Here are some smart ways to use your refund:

1. Add to your emergency fund. Set aside enough cash to cover six months of expenses just in case the unexpected happens. Our digital goal setting tool can help.
2. Pay down credit cards and other high-interest debt. You’ll save money on interest charges and increase your monthly cash flow.
3. Jump-start next year’s RRSP. Set yourself up for success next tax season by contributing your refund towards your RRSP. Your future self will thank you - next year and when you retire! At retirement time, this can mean thousands more in your pocket.
4. Invest in a tax-free savings account. Growth or earnings in a TFSA are 100% tax-free, and you’re allowed to contribute up to $7,000 for 2025. Contributing early in the year means more time for your investment to benefit from tax-free growth!
5. Pay down your mortgage. Making lump sum payments on your outstanding principal will save you significant dollars in interest charges over the long term. You’ll also own your home mortgage-free that much sooner.
6. Save for a child’s education. Invest in a registered education savings plan on behalf of a child or grandchild and you’ll qualify for a government-sponsored Canada Education Savings Grant of 20% of your contribution (to a maximum of $600).

How you spend your money today will have a significant impact on your future. For advice on how to get your tax refund working for you, contact us and talk to a Servus financial advisor.

Originally posted on March 29, 2018.