Do your clients have an income tax refund cheque coming their way? Consolidated Credit Counseling Services of Canada, Inc., has some suggestions for using these funds wisely.
Pay off debt. One of the best and most responsible ways to use an income tax refund is to pay down credit card debt. By making a larger payment towards unsecured debts, clients can reduce monthly payments, and save money on interest and other fees.
Read: Who manages your household debt?
Save for a rainy day. They may be financially stable today, but the slightest change in income or employment status could spell debt disaster. By using the refund to build an emergency fund, they can create a safety net for themselves and their family.
Invest in retirement. They can use the refund to pay off any RSP loans they may have taken out. If that doesn’t apply, they can use the money toward next year’s contribution.
Read: Retirement risks and strategies
Contribute to a RESP. If they’re not carrying debt and feel secure in their savings, investing in an education fund is another smart way to use their 2012 return. Contributing to a RESP comes with a 20% federal matching grant on the first $2,500 per child, per year.