Getting a tax refund, bonus or inheritance

If you get a windfall such as a tax refund, a bonus, or an inheritance, you might be tempted to splurge on things you don’t need.

Here are some smart ways to spend this money that will give you long-term benefits.

1. Pay off your debts

You could use this money to pay off your credit card debt or pay down your mortgage or personal loan. Paying off debts means you’ll pay less interest and save money.

2. Put in high interest savings account

Make this the start of a new savings plan by putting the money in a high interest savings account. There your money will grow with the power of compound interest. For example, if you put a $3,000 tax refund into a high interest savings account that earns 5% interest, in 5 years’ time you’ll have $3,850.

3. Contribute extra to your super

Making extra contributions to your super can really boost the amount of money you have to retire on. The catch is you won’t be able to spend it until you retire.

4. Consider investing your windfall

Investing your windfall can help you grow your money and keep it safe. If you choose to invest, make sure you take the time to consider your investment goals.

Contact us for advice on large amounts of money, such as an inheritance or a redundancy payments.

Source: Money Smart.