It is that time of year again, everyone is rushing to see their accountant to get their refund. This year is no different with the promise of the cash influx for the Morrison government. From the start of July to the 10th of July 2019 the ATO had received more than 800,000 tax return lodgements. Everyone is excited to receive their tax time “bonus”. But how will you spend your “bonus”?
The average Australian tax return is $2,500. This year, it could be more with the inclusion of the cash influx from the government. How you view and spend your tax return can have impacts on your future. If you use it the right way you could increase your wealth.
Firstly, let’s not review the tax return as a bonus. It is an opportunity. An opportunity to reduce our debt or an opportunity to increase our wealth. This simple change in mindset will encourage us not to rush out and buy the new flat screen TV with our cash influx.
Secondly, don’t rely on your tax return. It is a financial blessing, money you have worked for, don’t blow it on a quick whim. If you look at it as an opportunity for future growth and invest it wisely you will enjoy it for much longer than an impulse purchase.
If you have debt use this as an opportunity to reduce some of your debt. There are two methods you can employ here
- Pick the item with the highest interest rate and pay it down, credit cards, personal loans or home loans are a great place to start or
- Pay off your smaller debts first, you maybe able to pay off three smaller debts with your return giving you momentum to keep going with your debt reduction
Your tax return is a great opportunity to invest a decent sum of money into an investment or your superannuation. Think about it, if you set yourself a goal of depositing your tax return into your superannuation each year or another form of investment, you will actively grow your wealth for your future.
For example, for the next three years, invest your tax return into your super. Watch how this investment grows over the next few years, versus if you had spent $2500 on a new TV (don’t forget a TV needs electricity to run).
We aren’t saying don’t treat yourself, of course keep a little out to go out for dinner, get your hair done or go to the movies. All we are saying is don’t blow this opportunity, grow it instead!
If you would like help in growing your wealth on paying down your debt, work with a trusted accounting firm like DC Advisory Group.
The information provided in this BLOG is of a general nature only and has been provided without considering your objectives, financial situation or needs. Because of this you should consider whether the information is appropriate considering your objectives, financial situation and needs.