Top tips to make the most of your windfall – tax refund, bonus or inheritance

MoneySmart
(ASIC)

If you get a tax refund, bonus or inheritance here are some smart ways to use this money that will give you long-term benefits.

Pay off your debts

You could use this money to pay off any short-term loans or credit card debt you have. Or, you could use it to reduce your personal loan or mortgage.

Smart tip

Pay off higher interest debts like payday loans or credit cards first.

If you have more than one credit card, pay off the one that charges the highest rate of interest or the smallest debt first. For more information, see our webpage on how to pay off multiple credit cards.

Paying off debts means you’ll pay less interest and save money. Find out how you can reduce your debts faster by making extra repayments.

Work out how much you’ll save in interest by making extra repayments.

credit card calculator

Create an emergency fund

If you don’t already have one, start an emergency savings fund. Open a high interest savings account and, if you can, aim to build up 1-3 months’ worth of living expenses, so the next time life throws you a curve ball, you’ll be ready to face it head on.

Compound interest will help your money to grow. For example, $3,000 in an account earning 3% interest would grow to $3,485 in 5 years’ time. If you deposit extra money into this account, your savings will grow even faster.

See how compound interest increases your savings.

compound interest calculator

How Australians spend their tax refund

Spend tax refund 2018 thumbnail

Take a look at our tax refund infographic to find out the average refund and how people spend it.

Contribute extra to your super

Making extra contributions to your super can really boost the amount of money you’ll have to live on when you retire.

If you’re on a low income, the government will match your after-tax super contributions with 50c for every dollar you contribute, up to a maximum of $500. For more information on boosting your super see super contributions.

Work out how contributing more to super can affect your final super payout.

superannuation calculator

Consider investing your windfall

Investing your windfall can help you grow your money and keep it safe. If you choose to invest, make sure you take the time to consider your investment goals.

If you’re new to investing, our section on investing smarter is a great place to start.

If you would prefer to rely on professionals who are skilled in making investment decisions, you might consider a managed fund. These types of products give you access to a range of investment types with the benefit of having a professional investment manager choose which individual assets to invest your money in.

Get financial advice

For large amounts of money, such as an inheritance or a redundancy payment, you might consider getting professional financial advice. An adviser can help you develop a plan to make the most of your money.

We have tips on what to look out for when you are choosing a financial adviser.

Think through your options and use your windfall to give yourself a real financial boost.

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