Purses and Shiny Things

May 01, 2015 | Dian Chaaban


That’s what a friend of mine said she is planning on spending her entire tax refund on this year – she is expecting a big one and plans to “go big” on some material items she’s been eye balling the last few weeks. She thought I was kidding when I suggested she consider contributing at least half of the money back into her RRSP and/or towards topping up her TFSA to the new limit – but hey, to each their own, so they say.


If you are expecting a refund this year (or have recently received it because you filed early) then you may be tempted to spend it on “purses and shiny things” like my girlfriend, a well-deserved vacation or maybe even a new ‘toy’ for the summer. In some cases, this could be a great opportunity to treat yourself of those you care about – or – you could consider saving some or all of your refund for your future security within your registered accounts since the compounding effect helps even small savings grow significantly over the long term.


So, while they aren’t as exciting as shiny things, the following financial planning recommendations may be worth spending some or all of your return on this year:

  • Finally meeting a lawyer and having your Will drafted/updated and appoint your POAs and Executors (I know it’s on your to-do list)
  • Buying or topping up your disability, critical illness, long term care of life insurance
  • Topping up a kid’s RESP (using the refund to get the government grant doubles the CRA bonus)
  • Take advantage of the higher TFSA limit and top up your contributions to $41,000
  • Supercharge your RRSP and contribute earlier in the year than you normally do to take advantage of more time invested in a tax-sheltered account
  • Reduce non-deductible debt
  • Build yourself a liquid emergency fund (approximately 3 months’ worth of your living expenses). I also suggest applying for a line of credit if you don’t have one so that you have it when you need it (the key is to apply for it when you don’t need it)…

Check out more tips or read further about those listed above here.