Personal finance experts offer some suggestions on how to spend the extra money.
Canadians receive their tax refunds
While some might be tempted to treat themselves, experts suggest prioritizing financial goals such as paying off high-interest debt, making lump-sum mortgage payments, and contributing to a registered retirement savings plan or registered education savings plan. For parents, contributing at least $2,500 annually to an RESP can secure an extra $500 for their children’s education savings through the Canada Education Savings Grant.
In the current economic climate, experts advise Canadians to prepare for the possibility of a layoff or other hits to their income by keeping an emergency fund of three-to-six months’ worth of expenses in a high-interest savings account.
Experts suggest spending money on limited items
For those who want to treat themselves, experts suggest spending money on limited items like mini-vacations or nice dinners. This year’s tax season follows a rapid rise in interest rates, which has made interest costs on certain kinds of debt more expensive than last year.
Experts suggest that putting the extra money back into a savings plan can reduce the amount you’ll pay on your taxes next year and allows you to invest or save that money for retirement.
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