In the next month or so, you may receive a tax refund after filing your taxes. This is because the government has subtracted too much taxes from your income throughout the year. It would take too much work to calculate how much tax each person owes, with people earning different incomes and eligible for various tax credits and deductions. Instead, once a year, you receive a refund for the tax that was taken from your paycheques throughout the year.

If you have been without those funds throughout the year, you will now have many options for where you put the money now. You might want to pay for things that you’ve been wanting. However, you could also put the money toward paying yourself first, and the funding towards your goals.

Try thinking about your goals and desires for your financial situation. You know your money situation better than anyone else! This coming year, you may want to:

• Be able to pay for a certain bill or expense.
• Lower monthly debt payments or shorten your repayment period by paying more to the amount owing.
• Save for retirement, because you deserve to quit working some day in the future!

Here are some ways you could use your tax refund to get ahead:

• Divide your tax refund by twelve, then pay yourself that amount each month. This might work if you don’t know what you struggle to afford, but you’re always struggling to meet your needs.
• Make a list of big expenses or things you have wanted in the past year. See if your tax refund can cover all or some of these expenses, then save your tax refund to pay for these expenses.

Storing your tax refund until you use it

If keeping the tax refund in your regular bank account will tempt you to spend it right away, try opening a different savings account for it. Your bank may even offer a bank account that earns you more interest, so your tax refund can increase as you keep it saved!

Getting a tax refund can be super exciting, and you have many choices for where to put that money. Learn how to manage your money better with Momentum’s On Demand Money Management Workshops.