7 Meaningful Ways to Spend Your Income Tax Refund

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7 Meaningful Ways to Spend Your Income Tax Refund

Image source: katemangostar / Freepik

Many among us may have already filed our income tax returns by now as the last day of submitting ITRF BE (for salaried residents) was April 30, 2018. If you haven’t filed your tax returns yet, you can e-file it now (learn how) before the May 15, 2018 deadline. Also, do not forget to take advantage of the tax reliefs.

Some of us may also be eligible for some income tax refund (if you were overtaxed during the financial year) which LHDN will deposit in the bank account you’ve provided within 30 working days. Now you may be tempted to spend the entire refund amount on a shopping spree, but hey, there are ways to put the money to better use!

That new handbag or fancy watch may surely be good on the eyes, but these 7 things you could spend your tax refund on are good for your financial health and soul.

1. Pay off debts

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Living debt-free is a privilege 1% of us have. For the 99% of us, it’s a burden that eats into our bank account month after month, simultaneously sinking our credit score and financial goals.

Your tax refund can form the foundation of your debt consolidation strategy, depending on the amount. It may also turn out to be useful in repaying loans taken from family members and friends to ensure your core ties remain unaffected.

You can funnel the refund amount to pay off a major chunk of your compounding credit card debt, or payback some extra amount towards your personal or home loan (of course, if you have provisions for that).

If your tax refund is not enough for doing any of the above, you may want to consider going for a debt consolidation personal loan which is offered by a number of banks. Never hesitate to seek help as stress may worsen the situation. Our suggestion — reach out to AKPK for financial education, counselling, and debt management programmes.

At times, generating more income is the best strategy to achieve your financial goals (like boosting savings, arranging funds for investment and paying off debts). You can participate in our thriving gig economy by making some money on the side, work towards landing the coveted promotion that will translate to a fatter paycheck, improve your skill sets or job search to bag more lucrative offers.

Related: 10 Signs You’re Bad with Money, and Simple Solutions to Fix the Problems

2. Invest

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Congratulations if you’ve managed to stay mostly debt-free and have some savings in place, but letting all your money sit idle in your savings account is not the best idea. You must invest, preferably in tax-saving instruments first, to further grow your wealth and achieve your long-term financial goals like buying a house, retirement funds, safeguarding the future of your kids, etc.

Equally important is the fact that you must spend some time in researching about the risks and growth prospects of your chosen investment instrument, and diversify your investment portfolio to offset combined risk.

Bumiputeras can invest in ASB which announced a total annual dividend of 8.25% in December 2017. Other tools of investment which you can include in the mix could be fixed deposits, unit trusts, Private Retirement Scheme, EPF Members’ Investment Scheme and riskier equity-linked funds and stocks among others.

Related: 9 Essential Questions About Fixed Deposits That Everyone Needs to Ask Before Investing

3. Donate to a charity you care about

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With so many charities out there, there’s bound to be one that tugs at your heartstrings. Feed your soul by donating your tax refund to a cause you can relate to the most.

We have some suggestions — you can donate to Malaysia Independent Animal Rescue (MIAR), Women’s Aid Organisation, Lighthouse Children Welfare Home Association or visit Simply Giving for a charity of your choice or cause.

Also read: 4 Wise Things to Do with Your Salary

4. Invest in yourself

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One of the best ways to put your tax refund to good use is investing in yourself which will certainly garner great returns. We have two suggestions regarding the same:

Learn a new skill or upgrade an existing one: Upgrading your skill sets will definitely improve your career prospects, and it does not have to break the bank. Here are 6 websites for affordable online courses that you must check out to advance your career.

Want to learn from the best? Check out Masterclass.com and discover the success stories of stalwarts like culinary guru Gordon Ramsay, Oscar-winning director Ron Howard and many more.

Boost your health: Healthcare is not cheap, and health issues can obstruct your journey to achieve your financial goals. Use your tax refund to purchase health insurance, fund a complete health checkup and/or take up gym memberships or outdoor activities like badminton, basketball, futsal, tennis, etc.

The icing on the cake is you can claim tax reliefs on health insurance, health checkup, gym membership and sports equipment among others. Now that’s what you call a win-win situation, isn’t it?

Related: Why Women in Malaysia Should Opt for Comprehensive Insurance Plans

5. Fix up your home

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Have you been itching to fix up your home but have been holding it off due to other financial commitments? With some extra cash in your bank, the time to break the train of procrastination is now!

Get the best value for various home services with comparison sites like Kaodim, Recommend and ServisHero.

Also read: 7 Useful Tips If You’re Planning to Take a Home Loan in Malaysia

6. Go on a retreat

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Not all our suggestions thwart you from indulging. Sometimes all you need is an escape to soothe your mind.

Book yourself on a retreat to a remote resort or even a country you’ve never been to. Soak in the environment and people. Just try to avoid overspending on material items. The souvenirs you need are in the memories you make and the photos you take.

Here are some pro-tips to holiday debt-free, and other cost-saving travel hacks.

You can further boost your savings during vacations by using an air miles credit card — only after you carefully consider the minimum spend requirements and the air miles conversion rate. Don’t forget to read our blog on how air miles credit cards work, and our selection of top air miles credit cards in Malaysia.

Related: 31 Spectacular Countries Malaysians Can Visit Without a Visa!

7. Do something new

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To loosely quote Steve Jobs, creativity is connecting experiences you’ve had to create new things. A life without creativity is a dull one, so do something new and add some colour to your surroundings. And your tax refund can actually help you experience them.

New could mean trying a food you were always afraid to eat or watch an exciting TV show on Netflix you never thought you’d watch. It could also be starting a new hobby like dancing or something more adventurous like skydiving.

Just recently, AirRider opened up at the One Utama Shopping Centre in Selangor and simulates what skydiving feels like indoors.

If skiing or snowboarding was something you wanted to try but thought you could not without snow, then you can visit First Traxx. As Malaysia’s first ski and snowboarding centre, they believe snow sports should be experienced by everyone in Malaysia and that means you!

Now that you have some ideas on how to spend your tax returns, you can continue the work-life cycle with a little more significance. Here’s to a meaningful journey ahead!

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