If you’re one of the lucky people who is expecting to get a tax refund this year, then making a plan for how you are going to spend your money could help you make the best use of those extra dollars!
How long does it take the ATO to issue tax refunds?
If you made a request to the ATO for a tax refund in 2019, you might have already earmarked the funds for spending. The time you can expect to wait for your tax refund is determined by the way you submit a tax return. If you do it via a registered tax agent or online, then you can expect to get a tax return issued much quicker than when you use the post.
A paper tax return can take up to 7 weeks to process. If you process your tax return online or through a service like TaxBot, then most refunds are processed within two weeks.
Spending Your Tax Refund Wisely
When you get access to money you were not necessarily expecting to receive, it’s easy to get carried away. Here are the top ways you can use your 2019 tax refund from the ATO.
#1 – Pay off some debts
Most people will carry debts at some point in their lives. It’s perfectly normal, and with many low or no interest finance options, these debts aren’t always so expensive. However, if you have a high-interest debt account, which is quite common with home shopping or store card accounts, then you might find that your annual percentage rate of interest is quite high.
If this is the case, paying down these debts can save you a significant amount of money that you would have paid in interest each year.
#2 - Start an emergency fund
An emergency fund is something everybody needs, but many people rarely have. If you haven’t started an emergency fund, then when a significant expense pops up, you could be left paying the price for many months to come. Financial experts suggest that this emergency fund should contain at least 6 months’ worth of savings in an easy to access account. Getting a tax return can help you to start or add to an existing emergency fund.
#3 – Buy something new
It might sound obvious, but if you have been denying yourself the pleasure of a new luxury item for some time, then spending your tax return here is another valid route for these funds. If you have been putting off buying a new car or computer, then spending your tax refund here might make sense. If you consider should something go wrong, then you need to take finance out to cover the cost replacement, this pro-active approach could pay dividends.
#4 – Start saving for something specific
If you are looking to make any important future purchases, creating ‘savings’ buckets within your accounts is a great way to help you start saving for something specific. Putting your tax refund dollars towards these items can prevent you from taking out finance to cover the costs in the future.
#5 – Book a holiday
It might seem a little extravagant, but when was the last time you took a proper holiday? Getting the money together to go away is never a priority; especially if you have other things to do. Take advantage of having a little extra cash in your pocket, and book yourself a little trip away for some rest and relaxation.
#6 – Take a course
If you have wanted to invest in a course to develop your skills either personally or professionally, then you might be able to use your tax refund to help fund those activities.
#7 – Start a new hobby
Have you toyed with the idea of starting a new hobby, but haven’t had the spare cash to pay for the equipment or the classes? Using these funds could be the gateway to a new interest that brings you hours, if not days, and week of joy! Stop looking for reasons to put things off and start a new hobby with your tax refund dollars!
It doesn’t matter when you get a large tax refund that constitutes a major windfall or a more modest amount; it is extra money that for most people, they were never expecting to have. Treat yourself, get a new hobby, purchase something you might not normally, or use it to pay down some debts. The very fact you are reading this post is a testament to the fact that you intend to make a plan and not just splash out when the funds hit your account.