Give Yourself A Raise From Your Tax Refund

Give Yourself A Raise From Your Tax Refund

Are you consistently receiving a hefty tax refund? It may feel like ‘found money’ from completing your tax return. Like a reward for doing all that work. But it’s really an interest-free loan to the government. This money would be better off working hard throughout the year, for your benefit.

It’s hard to resist turning a big tax refund into some good fun. If this is where your mind goes, and you start dreaming about that windfall, then your investment strategy could miss out on an important opportunity.

Sidestep the temptation. Give yourself a raise instead. With every paycheque you will have more money that you can invest, to build wealth for your future.

By filing a T1213 form to the Canada Revenue Agency, you consent to your employer withholding less tax from your paycheque. It will take about 4 weeks before you see an increase in your pay.

Once you get that money back under your control, don’t just leave it sitting in a bank account. You need a clear plan of how to use it.
If you don’t have an emergency fund in place, this could be a great way to begin one. Or, you could pay down some debts. Make it a goal to get a high- interest credit card down to zero.

Avoid more temptation by automating your efforts. Today’s banking systems offer effortless ways to sock away that extra cash.

You can set up a pre-authorized contribution to your Registered Retirement Savings Plan or a Tax-Free Savings Account. Or a combination of both. Work with your Financial Advisor to plan the best way to invest the money and reduce taxes.

If you prefer more direct control, set up an automatic transfer of money each payday. Try this for a few months, then see how well it works for you.

It’s important to remember that building wealth is about discipline, not complete deprivation. If your lifestyle feels a little too lackluster, tweak your monthly plan a bit. Because too strict a budget is one that will eventually fail. Add in some funds to have a bit of fun.

Give yourself a raise, and get that money working to increase your wealth. Ask your Financial Advisor to help plan your strategy.

7 thoughts on “Give Yourself A Raise From Your Tax Refund

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