- Before you start reading this blog, I’m warning you that it does not contain typical financial advice. After all, at this time of year personal finance writers and bloggers wax lyrical about all of the important things you should do with your income tax return, like reduce debt; contribute to your RRSP, TFSA or your kids RESP; or pay down your mortgage. I know. I’ve already written that article.
- According to Tim Cestnick at the Globe and Mail, CRA pegs the average Canadian tax refund is about $1,400. I agree with him that if you receive a $1,400 tax refund each year for 25 years and invest that refund at 8% (which may appear on the high side but is realistic over a 25-year time horizon), you’d have $102,348 at the end of that time.
- But what if once, just once, you blow it all on one or more items on your personal wish list? Maybe the memories you buy with that windfall will ultimately turn out to be an excellent investment or satisfy a greater need than a few extra dollars in the bank when you retire.
- So continuing on this heretical tangent, here are some ideas to think about.
- Take a vacation: Whether renting a cottage for a week with the family or jetting off to Disneyland, you will be buying the gift of time with your loved ones and a break from workplace stress.
- Replace energy-inefficient appliance: Investing in a new washing machine can save you $415 dollars over the 11 year life of the appliance. Throw in a clothes dryer and energy savings will amount to another $160. And if you don’t have to go to the laundromat and pay a repairman every time one of these appliances conks out, you’ll save time and time is money.
- Home repairs: You need a new roof. Or, you’ve been meaning to upgrade your kitchen and bathroom. Investing your tax return in your home will increase your enjoyment and it may enhance the value of the property.
- Hire household help: Divorces are expensive. We have been married for 41 years and I intend to stay that way. I attribute my stable marriage in part to a regular cleaning lady. My husband and I both hate cleaning and I hate clutter. Bringing in a pro is one of the best investments we ever made.
- Get a pet: We have gone from a sheltie to two Nova Scotia Duck Tolling Retrievers to a tiny cockapoo in the course of our marriage. They get us off the couch and walking which is good for our health. And there isn’t a day that goes by when they don’t make us laugh. Our succession of cats has been more sedentary but they were always good for a therapeutic cuddle.
- Seek financial advice: A financial plan is a road map for life and retirement. You get what you pay for. Invest your tax return in a consultation with a well-reputed independent financial advisor who can help you develop a strategy and a timeline to reach your goals.
- Support sports or the arts: Join the museum or the art gallery. Get seasons tickets for a theatre company. Take your kids to a rock concert or a football game. Learning is not only done in school and bonding with your family while you cheer for your favourite team can’t be beat.
- Pamper yourself: Depending on the size of your return, spend it on you. Get a new haircut. Have a spa day. Buy a new outfit. With your updated look you will have the confidence to face another day at work or maybe even look for a new, better-paying job.
- You get the idea. By all means pay off your student loan, save for the down payment on a house and get rid of credit card debt. But every now and then if you can afford it, spend your tax return on yourself and your family. After all, you’ve earned it.
|Written by Sheryl Smolkin|
|Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.|