If you’re expecting a bumper tax return this year, the only question to enter your mind is probably: “how shall I spend this juicy lump sum?”
Sure, there are plenty of smart ways to use your new found wealth like setting up an emergency fund and paying down debt but when you’re armed with cash it can be pretty tempting to spend up big.
Here are 5 ways to splash out and the less silly alternatives that will let you have some fun without blowing all of your tax return…
1. Throwing a part-ay
There’s nothing wrong with knocking back a schooner or two with your mates to enjoy your hard earned cash but that doesn’t mean all drinks should be on you all evening.
Alternative: A more affordable way to celebrate your pile of green is to have your close friends around for drinks with a BYO clause in the invitation, you spot the sausage sangas.
2. Shopping up a storm
While your tax return may be burning a hole in your wallet don’t rush out and splurge on the latest home goods or ready-to-wear high end fashion.
Alternative: Join the sustainable purchasing movement by buying things second hand. By taking advantage of bargains on websites like eBay or GumTree, you’ll save yourself bucket loads of cash and get your shopping hit in one.
3. Embarking on a world escape
The cost of a return ticket across the globe will run into the thousands, so unless you received an epic lump sum tax return, a European getaway will likely suck your tax return funds (as well as your savings) dry before you lift off.
Alternative: With a return ticket to nearby islands like Fiji sitting at a couple of hundred dollars, your tax return should be more than enough for a week long vacay filled with mojitos, massages and manicures.
4. Buying top of the line
You may have your eye on a luxury spec car or top of the range LCD Plasma TV but think about it – do you really need all the bells and whistles?
Alternative. Instead of overstretching yourself to get the best of the best opt for the base model and save yourself thousands of precious dollars.
5. Playing the tables
Gambling isn’t exactly the savviest way to spend your dough and is likely to leave you worse off than before you received your tax return.
Alternative: Give the investment game a go. Holding a diversified investment portfolio by spreading your money across different investments is far less risky than a casino wager.
Where to put the unused portion of your tax return:
– Have a home loan? Making extra repayments or putting your left over tax return into an offset account attached to your home loan will reduce the life of your mortgage and save you thousands of dollars in the long run.
– Emergency or travel fund? Look for a high interest savings account to help your green grow. Try these interest earners:
Bankwest Hero Saver – 4.00% interest rate as long as you deposit a minimum of $200 and make no withdrawals in the month. No account keeping fees.
HSBC Serious Saver – 4.00% intro rate for first 4 months then a 2.70% standard interest rate. No account keeping fees.