By Sheryl Smolkin
Working it out
Expecting an income tax refund? Before using it for an exotic vacation, consider how you can put it to work to enhance your financial future.
You just pushed the send button on your income tax return and you can’t wait for your refund to be deposited into your account. But before you start thinking about using that money for an exotic vacation or a down payment on a new car, you may want to think instead about how it can enhance your family’s financial picture over the long term.
Here are five options to consider:
1. Start an emergency fund
At some time in your life, one of the following things may happen: You will lose your job; your car will break down when you need it for work; or you will need to take extended, unpaid time off work to care for a sick or dying family member. By having the money to cover about three to six months of necessary living expenses in an easily accessible, high-interest emergency savings account or a TFSA (if you have contribution room), you will be better able to financially weather a crisis. Your income tax refund can form the basis for an emergency fund, or enhance your current emergency savings.