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What to do with your tax return

By ATB Financial 12 March 2019 1 min read

What’s the next best time of year outside of the holiday season? Tax return time!

Many Albertans receive a tax refund each year. Your refund comes with one very important question: What do I do with this money?!

And depending on who you ask, the advice you receive could be conflicting.

 

“Spend it! You worked hard. Enjoy yourself; you deserve it!” 

Or perhaps... 

“Time to save. Now is not the time to make rash decisions.”

 

Money, as I’m sure you know, has a funny way of eliciting emotional responses to these financial quandaries. Sometimes your time and energy are better spent not justifying “right vs. more right”, but rather in reviewing your big financial picture through a more rational lens. What are your goals? What do you want and need to achieve? Are you making an optimal decision that will help you realize you goals?

For some, there may be simple answers. For others, the answers are not as cut and dry. Regardless of your situation, I would encourage you to seek expert advice from a financial advisor.

 

Complicated financial situations warrant a bit more investigation to arrive at doing what’s right for you.

Typically, your financial advisor will review your plan and help you determine your short- and long-term savings and investment goals. Together you can approach—from an objective perspective—your financial decision to either:

  1. Pay down your debt and reduce your costs of borrowing, or
  2. Maximize your returns based on your unique circumstances.

The typical investor approaches growing savings and repaying debt as two separate objectives that are independent of each other, when in reality they are inextricably tied.

For example, by reducing your cost of borrowing and consolidating higher interest debt into a lower rate debt helps to improve your monthly cash flow and provide funds needed for savings.

 

The bottom line:

The answer to “What do I do with my tax return?” (and likely most of your money for that matter) is not a simple one.

What I will say is that a good financial advisor is worth their weight in gold, and sound advice taken early is priceless.

Need help?

Our Client Care team will be happy to assist.