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The terrific trifecta: three easy ways to make the most of your tax return refund

Financial Wellbeing Coach

2021-07-09 00:00

Estimated reading time
5 min

In this article

  • Paying off debt
  • Saving
  • Investing

You’ve squeezed every last cent of value from your EOFY tax return, having tracked your work-related expenses like a well-seasoned pro. But how do you make the most of said tax return once the money’s sitting pretty in your account?

Three ways, actually. Our terrific trifecta of money-maximising tips could see your tax return blossom and grow like a well-watered fruit tree, maybe even reaping sweet financial dividends long into the future. Here’s how.

  1. Paying off debt

  2. Debt isn’t evil per se. It can in fact grow your long-term wealth by allowing you to invest in assets such as property or building a business whose value will increase over time. But the so-called ‘bad debts’ – things like borrowing to buy a designer puffer jacket you may not exactly need, or consistently living above your means – chip away at your financial wellbeing.

    Keep in mind, too, debt repayments can quickly snowball. Most credit cards and home loans work on compound interest, where debt accumulates based on the total value of your loan (so you’re essentially paying interest on interest).

    With all this in mind, why not use that golden tax return nest egg to start paying off your debts? We recommend prioritising them in order, starting with the most urgent or expensive, then working your way down the list. Feels good, doesn’t it?

  3. Saving

  4. Our 2018 Financial Wellbeing (PDF, 5.2MB) study found that 22% of respondents had zero savings, and that one in four Aussie households couldn’t afford to pay their bills on time. The good news? It’s never too late to start saving and build up a buffer, and what better time than when you have a wee influx of cash from your tax return?

    Start by setting a savings goal using the tried-and-true SMART method, then crunch the numbers in our handy Savings Calculator to see how long saving that amount will take. Then get saving! And remember, micro-savings are a great way to boost your balance. Try reducing your takeaway habit to once a fortnight, or swapping two barista coffees per week for a DIY version. Those pennies add up.

  5. Investing

  6. Investing may seem like it’s for the more mature, people with lots of money or those savvy on the stock exchange, but it absolutely isn’t! And just because retirement seems a long way off, it’s never too early to start investing. With your well-earned tax return just begging to be put to use, now’s as good a time as any.

    Judicious research is a great place to start. Would you prefer to invest in property, super or shares? How much capital do you have to play with? Are you risk-averse or open to more of a gamble? Beef up on your investment knowledge and get going – a savvy investment strategy could reap significant financial rewards down the track.

    With a little planning, that modest tax return could kickstart your journey towards financial wellbeing for years to come.

The terrific trifecta: three easy ways to make the most of your tax return refund
Financial Wellbeing Coach

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The information set out above is general in nature and has been prepared without taking into account your objectives, financial situation or needs. Before acting on the information, you should consider whether the information is appropriate for you having regard to your objectives, financial situation and needs. By providing this information ANZ does not intend to provide any financial advice or other advice or recommendations. You should seek independent financial, legal, tax and other relevant advice having regard to your particular circumstances.