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Top 10 ways to use your tax refund

And yes, you can still treat yourself

Here are some of the smartest ways to use your tax refund

The average income tax refund is around $1,600, and there are lots of ways to spend it.  A super bad way would be to blow it on a crazy party night out with bottle service and lobster for you and all your bffs.

I suggest doing a few of these 10 things.

They are ranked in order of financial importance so don’t go and give to a charity if you still have credit card debt! Take a gander and see which one is important for you and your money. You’ll feel good spending it on your future financial well being.

1. Pay Off Credit Card or Department Store Debt

If you have outstanding credit card debt, you should pay it off first. You could be paying from 18 percent to 29 percent in interest calculated DAILY, which means huge savings if you pay your debt off. Credit cards apply 50 percent of your payment to new purchases and 50 percent to old purchases, so you have to bring your balance to $0 for the interest to stop.

2. Emergency Fund

If you don’t have an emergency fund, this would be a great way to start. Most financial advisors suggest you have from three to six months’ worth of expenses in an account, but with the employment market being a bit shaky for millennials or freelancers, I’d advise everyone to keep six to eight months. You never know how long it will take to get a new job when the market is weak and getting weaker.

3. Contribute To RRSP

You could take your money and make an early contribution for next year. You’ll be ahead of the game and will benefit from any growth on the money depending on what you invest in within your RRSP (ETFs, mutual funds, stocks, bonds, etc.). Plus you’ll get more money back on your next income tax return.

4. Contribute To TFSA

If you think you might need the money but still want to invest for the long term, you could invest in a TFSA and have that money grow tax free. Try not to take it out and let it grow. The big benefit to these accounts is letting them grow over a longer period of time and then harvesting the money tax free.

5. Contribute To Your Kids’ RESP

If you have kids and have taken care of your own retirement and emergency funding, then why not put your income tax return into your kids’ RESP. The government will give you 20 percent of your contribution of up to $500 each year of your kid’s eligibility, which will give you some bang for your buck. There are also additional grants depending on your income level.

6. Charity

If you are a money maven or maverick and have checked all of the boxes above, you could start contributing to a charity of your choice. Think of something that you’re passionate about and get out there and support the cause. You might be eligible for an income tax credit if they are a registered charity. And you’ll feel good doing it too.

7. Take A Trip

You’re young, and this is the time to see the world. If you’ve fulfilled your financial responsibilities, mainly paying off your high-interest credit card debt, you could think about taking a trip somewhere. Of course, taking a trip shouldn’t be on the top of your list of priorities, but why not treat yourself if you have leftover cash?

8. Something You Need?

Do you need new brakes, tires, windows, to pay property tax, buy insurance, pay back a loan from bank of Mom and Dad, or something else that you have been living without? Use the cash and feel the joy of crossing it off your list. One last thing to worry about.

9. Start A New Business

Do you have an amazing idea that will blow up the internet? Use the money and build a site or develop a Facebook page to support your idea. Seed money that takes off now could be fantastic income in years to come. You could use the money to do everything from marketing to product development. Better to have tried and failed than to never have tried at all. The caveat though, is you are probably going to need much more money than $1600 in tax returns to get this done. But give it a thought!

10. Do Something Nice For Your Family

Do you have a kid in school that could use that money? Do you have parents, siblings or grandparents that would love to go on a trip or go out for a show and fancy dinner? Spoil them and you’ll really be spoiling yourself.

Figure out which on this list is your largest priority and use the money smartly. 

David Lester is a personal finance expert and the author of two finance books, I (Heart) Money and From Middle Class to Millionaire. 

Cover: Ben Ruby/Vice illustration

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