How to spend tax refund money?

Don't let that bonus tax refund money go to waste this year. Whether it is spending it wisely or investing it, we have collated a list of quick tips and ideas to help you when it comes to this time of the year!

Let's first take a look at what Australians did with their tax refund.

(Source: ASIC's MoneySmart Poll, August 2015)

1. Pay Off Debt

Our most recommended tip is to use your tax refund money to pay off bills or credit cards. Many may feel that a few thousands of dollars will make no improvement to the size of their debt and would rather splurge on a night out or some new clothing. But based on Australian Bureau of Statistics data, it appears that a large percentage of Australian households hold some form of debt, whether it is a personal loan, credit card debt or a mortgage (or even a combination of all). Much of this percentage will have debt many times larger than their annualised disposable income and this debt will snowball in the long run, so why not get ahead early?

2. Voluntary Super Contribution

While retirement can seem a long way away from you, contributing extra to your super fund can be a great investment to make, especially when your superannuation is taxed as low as 15%. This is money that is in addition to any compulsory super contributions your employer makes on your behalf or anything you add through any salary sacrifice arrangements you may have. Plus the compound interest your super generates, you are on the way to a happy, early retirement. However, you should note that caps apply to contributions made to your super in any tax year and these caps can depend on your age or whether you contribute before or after tax and make sure you do not exceed them.

3. Add Some Value to Your Home

Renovating can add immense value to your property as well as your living standards.

Before jumping into renovating, just like any investment, property markets are not guaranteed to rise meaning home improvements may not yield positive returns. Families often make mistakes in the area they choose to improve on or spend more money than needed on these areas in the house. Tax refund money is limited so stick to focusing on a small area of your house. Even painting just one room can freshen things up for the new financial year.

Here are just some tips we believe are useful and easy to implement. There are many more other ways you can make use of the tax return money this year. See below.

(Source: ASIC's MoneySmart Poll, August 2015)