It seems the days of splurging your tax return on frivolous purchases are gone, with a new survey by ME revealing the majority of Australians plan to save or invest their tax returns or use the refund to pay bills or pay down credit card debt.
The survey results found 43 per cent of Australians are expecting to save or invest and 27 per cent are planning to pay off debts such as a home loan or credit card.
Only 15 per cent of those surveyed are planning to splurge on discretionary items with the top three items on their wish list being new clothes, entertainment or a holiday.
John Powell, ME General Manager of Deposits, said ME’s findings suggest many Australians are using their tax refund to get their financial house in order and improve their financial security.
“And rightly so, very few Australians factor in their tax refund into their household budget so it can make a big difference to your financial wellbeing when used wisely,” said Powell.
Powell suggests paying down debt is a great use of your tax refund as it reduces ongoing costs and frees up your monthly budget.
“While a home loan has one of the lowest rates of any type of debt, it’s also a long-term affair and any lump sum you tip in today can knock years off the term and save you a bundle in interest along the way. Using an offset account is a good way to do this,” says Powell.
Powell also recommends using your tax return to kick into your super fund.
“Using a tax refund to grow your retirement savings is also a smart move. Given the power of compounding returns the more you contribute now to super, the more you’ll have for retirement.”