How to spend your tax return

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This article was originally published April 2018 and has been updated.

The smell of fresh rain, melting snow, and the promise of blooming flowers around the corner can only mean one thing—it’s finally spring. And that also means it’s tax time.

For some, it’s a time to part ways with some of your hard-earned cash and for others it’s a time to rejoice because tax returns are on their way.

Whether your return comes with one or many zeros, think of it as a blessing. Your return is basically free money (ok, not really, but you know what we mean) and you should use it for powers of financial good instead of being tempted to blow it all on something fun. Unless that’s what you want to do. And in that case, an all-inclusive vacation probably sounds pretty good right about now.

But if a vacation will send your bank account on an all expenses trip to cringe city, we have a few ideas on how you can spend your return cash in a way that won’t rock the bank account:

  1. Save for retirement: Everybody has to start somewhere and everyone moves at their own pace. Whether you’ve been savings for years or need to get started, there’s a lot of value in putting money away for future you.
  2. Buy some art: Spend that tax return on something that will increase in value over time, like a piece of art. Not only would a new piece of art improve your mental health by adding a burst of colour to your life, you may end up investing in the next Picasso. Or Lewis.
  3. Invest in your home: Invest in something that could grow in value—like your home. If you already own your own property, your return could go toward a project that might add value to your existing property, like that new deck or shower you’ve been thinking about. If you’ve been considering home ownership, you could always use your return towards a down payment on your first home.
  4. Invest in your wardrobe: Use your tax return to buy a big-ticket item you need, but have maybe been putting off. This could be something like new dress shoes or a high-quality blazer. Investing in something you may not need all the time will let you build a capsule wardrobe and upgrade your look gradually, at an affordable pace.
  5. Donate to a charity: Maybe you’d rather invest in your karma. After all, it never hurts to help those in need. There’s no price limit on donating your time, but if you donate from your wallet, you may be able to claim some of it on next year’s taxes.

Of course, there’s always the standard option of paying off your existing debt, too. While it might not be as fun as investing in a painting or getting some new duds, paying off your existing debt is never a bad idea.

Looking for more financial advice? Get in touch with your local credit union today.