Expecting an income tax refund? Plan ahead, with the mindset that this is not a bonus. Avoid spending it on impulse. We’ve compiled a list of the best things you can do with your income tax refund, and how you can use QUBER to keep it safe in the Vault until you need it!
While it’s important to grow your long-term savings, it’s equally important (and often forgotten) to build up your liquid savings to cover yearly expenses and bring your debt to a manageable level.
Our recommendations, along with QUBER mobile savings app, are focused on improving your spending habits so you can plan ahead for the short-term, have sufficient living expenses in liquid cash, and improve your debt-income ratio. Let's get started!
Pay off high interest debt
This one is very important - if you are carrying expensive debt, pay it off as soon as possible. To put this in perspective, say you have $5000 in credit card debt, and your payments are covering only the minimum payment. It could take you over 20 years to pay that debt off, and you’ll have paid more than the money you borrowed in interest ($5,000 in debt, $5,590 in interest!). Take your tax refund and either pay off that debt completely, or as much as you possibly can. Check out this Credit Card Payment Calculator to find out how much you are paying in interest. Why give away your hard earned money?
Save the money towards your emergency savings fund
With no high interest debt to pay off, the next best thing to do with your tax refund is save that in an emergency fund. This will help you deal with emergencies that pop up throughout the year, that many people rely on high interest debt to cover. Let’s avoid using high interest debt for things we can’t afford. Save up instead so you are prepared when you need the money. Your emergency fund will cover things like a broken appliance, car repairs, unexpected travel, vet bills - the list goes on and on. Read more about building your emergency savings with QUBER.
Save the money towards your summer vacation
Vacations are important, especially in a world where everything is go go go. You need to make a decision on what you can afford for a vacation - keep it really cheap by going camping or having a staycation, or save your money and travel. The key here is to not get into debt. Work with what you have and make smart money choices that will help you in the future. Create a QUBER vacation jar and add some or part of your tax refund as soon as it comes in.
Save the money for your kids activities
We all want to give our kids the best. But it’s also important to remember they don’t need to have everything. Plan out the activities you can afford in the coming year, and set aside the money to pay for those activities. If you can’t afford it, find another alternative activity that is more affordable. There are many options out there! Create a QUBER Kids Activity jar and add some or part of your tax refund as soon as it comes in.
Save the money for your education (or your children’s education)
Avoid student loan debt for you, and your children. Create a QUBER Education jar and add some or part of your tax refund as soon as it comes in. At the end of the year, take the money you have saved and add it to your RESP or pay your tuition!
What else do you pay for throughout the year?
Whatever it is, create a saving jar and add some or part of your tax refund to your jar! Can’t decide which is more important? Divvy up your refund across your jars so you have a good start on all of them. Then add saving rules to your jars to keep the savings going throughout the year.
Download QUBER mobile savings app, create your saving goals, and start saving money.
Feeling overwhelmed and stressed about money, and not sure where to start? We can help you plan out your savings for the year and help you stay on track. Our premium Ignite service is completely un-biased and our goal is simply to help you get back on track financially. Try it out free for a month.