Once you know how much you will be getting back from your income tax refund, the biggest question becomes: what am I going to use it for? And it’s a fair enough question, because it isn’t every day that you get an unexpected lump sum of cash deposited directly into your bank account. So to help you decide, here is a short article on what people us their New Zealand tax refund for.

Firstly, to set the scene, let’s take the boring statistical approach; any knowledgeable article on the subject wouldn’t be complete without it. Without further adieu, or research, here are…

New Zealand’s top 5 uses for income tax refunds (statistically):

1. Pay off credit card debt
2. Save it
3. Put it towards a holiday
4. Go shopping
5. Spend it on friends and family

Well that’s okay, and provides us with some inspiration, but it is a sensible list, and that’s putting it nicely. Sure we would all like to have less debt floating around, but we just got a massive refund, time to have fun. So here is another top 5, this time no empirical research was undertaken…

The BEST 5 uses for income tax refunds:

1. Withdraw it as cash, throw it over your bed and roll around in it – amazingly this still allows you to use it.
2. Spend it all in one go without thinking. When else will you get that opportunity again?
3. Buy the biggest bottle of champagne you can (think 3m high) and have a giant champagne fight with your mates.
4. Jump on Grabaseat and buy as many of the cheapest seats you can to a random destination. Weekend in Oamaru anyone?
5. Donate it to charity – then sit back, relax and wait for karma to do its thing.

In all seriousness, with the average New Zealand income tax refund weighing in at a whopping $300+ then investing it is probably the safest choice. The great thing about investing your tax refund is that 70% of people receive a refund every year. This means that if you reinvest that refund every year, in a short time, with compound interest and earnings on your side, your refunds will quickly grow into a sizeable nest egg.

So if you have a refund coming, or you have just applied at MyRefunds.co.nz, then it is worth considering your options. No matter what you do, at least you will have got your refund.

This article was written by Tom Taylor for MyRefund.co.nz.