Why you shouldn’t blow your tax return

Why you shouldn’t blow your tax return orange wealth

August 17, 2017 Why you shouldn’t blow your tax return

It’s that time of year.

If you’re like me, chances are you’ve done your tax return by now and are waiting on a potential return.

Going by the stats, you’re likely one of the 82 percent of Australians who’ll get a refund this year.

On average, Australians typically get a return of around $2,112, give or take.

Now, it’s easy to fall into the trap of seeing your tax return as an excuse to splurge. We’ve all been there. It’s human nature. We work hard all year – it’s completely natural to want to reward yourself.

Before you let your return burn a proverbial hole in your pocket, though, it’s worth pausing for a moment.

Rather than blowing it on something you possibly don’t really need, it’s worth considering putting your windfall to work, particularly if you’re not entirely in control of your spending, or if you’re carrying debt.

Here, having a plan is important.

My rule of thumb is this: first and foremost, pay down any debt you have.

After that, make sure you squirrel some money away for the future.

If you still have some fat left after that, then splash some cash and treat yourself a little.

I’ll break it down it for you. Here’s why you shouldn’t blow your tax return:

Pay down outstanding debt

Credit cards

Tackling high-interest debt should be your absolute priority.

If you’ve let your credit card debt balloon over the past 12 months, now’s the perfect time to reign it in.

Do the maths on the interest you’ll pay over the next six months, and you quickly work out why it’s important to tackle this one first.


I’ve touched on it previously, but with utility bills creeping higher and higher each year, it can be hard to keep on top of your bills, particularly if you have a family.

That being so, tax time can be the perfect opportunity to clear the decks with any outstanding bills you may have.


If you’re a home owner, your next cab off the rank should be your home loan.

By that I mean, use your return to pay a chunk off your mortgage, or at least pop the money into your offset, if you have one.

Squirrel money away

Emergency fund

If you haven’t got one, it’s well worth sticking money aside to kick-start an emergency fund – again, particularly if you have a family.

Touch wood something never happens, but it’s important to have a financial Plan B for those inevitable rainy days.

If you already have one, top it up.


I’m a big believer in topping up super.

If you still have money up your sleeve after clearing the decks, putting that extra cash into your super’s a good idea.

If you’re a low-income earner, you may be eligible to receive a co-contribution from the government, which is $0.50 for every dollar you contribute up to $500.

Home deposit

If you’ve yet to dip your toe into the housing market, a sizeable tax return will give you the perfect base to start saving for your home deposit.

Speaking from experience, it’s much easier to regularly save when you have a good savings base.

Splash some cash

Home improvements

If you’re an owner-occupier or have an investment property, it’s worth considering making some improvements to your property.

If it’s an investment property, maybe consider tackling any outstanding maintenance. Bear in mind you should be able to claim it for this financial year.


Even if it’s just for a week up to the Gold Coast, put some money towards a holiday.

I can’t stress this one enough – you just can’t put a price on time away from work, particularly if you have a family.

On yourself

And by that, I mean spend it on something you actually need.

I’m talking essential stuff – things you’ve been talking about for months, but have never gotten around to – like new clothes for work, or maybe you’ve been putting off seeing the dentist for the past six months.

If it looks like you’re due for a sizeable tax return this year, you should definitely consider getting financial advice to use it to your advantage. As always, if you need a soundboard to talk through any of these, feel free to give me a shout.

Disclaimer: all information contained within this article is of a general nature. It does not take into consideration your personal financial circumstances. Please consult a professional financial adviser (just like us 🙂 ) when making a financial decision.

Jason Chew

I've been in the financial services industry for 10+ years and love coaching people to make the most of what they have.

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