October 28, 2025 • 22 mins
If you were lucky enough to get a tax refund, there's a HUGE temptation to rush out and spend it - after all, it feels a bit like free money. But there are some great ways to use it that'll give you much better bang for your buck. Canna Campbell - a financial planner for 20 years - and Fear & Greed's Michael Thompson go through five smart ideas for using your tax refund.
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The information in this podcast is general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.
Canna Campbell is an Authorised Representative and Financial Adviser of Links Licensee Services Pty Ltd AFSL No. 700012 ABN 97 678 975 589.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Welcome to How Do They Afford That? The podcast that
peeks into the financial lives of everyday Australians. I'm Michael Thompson.
I'm an author and the co host of the business
news podcast Fear and Greed. As always, I'm with Canna Campbell,
financial planner, founder of Sugar Mama TV, the financial literacy
platform that is just about everywhere YouTube, podcast, books, Instagram, threads,
TikTok and more. Hello Canna, Hello, how are you? I
(00:23):
am good, Thank you, and I'm looking forward today's episode
because it is a timely episode because when now a
few months past the end of the financial year and
everyone's hopefully got their tax in hopefully maybe a little optimistically,
but for some, for the lucky ones, tax refunds getting
(00:46):
a bit of money back, right, for some people it
might be a couple of one hundred dollars, maybe a
few thousands.
Speaker 2 (00:53):
Well, I remember reading that the average tax refund that
Australian and Australian gets is around two to two and
a half thousand dollars. But with the gig economy and
obviously hex stits and things like that, it's actually now
the average is a lot lower. It's around about one
and seventy seven dollars fund, so the returns are a
(01:14):
lot lower.
Speaker 1 (01:14):
So if we assume then that the average is somewhere
between those two, that may be somewhere between one and
two thousand dollars. Right, it feels like bonus money, like
free money. And I'm just like, just even as I
say this one money, that's right, I could just see
this that that little twitch in your eyebrow that I
(01:35):
enjoy seeing when something really stresses you out. But how
do we actually make the most of it if we're
thinking of it as bonus money, as free money? Today,
we're going to make a list, because we love a
good list on this podcast. We are going to come
up with five smart ideas to make the most of
your tax refund. But first, why do they feel like
(01:56):
free money? I'm assuming this is a risky mindset.
Speaker 2 (02:01):
Well, it's psychological. You know, the refund it really does
feel like a bonus, particularly if you weren't expecting it
and you you know, discover oh look the aty of
deposited you know, one thousand dollars or two thousand dollars
into my bank account.
Speaker 1 (02:16):
Also, and as you've been paying your tax, the whole
way through the year, and that that year has passed.
Now you're kind of a few months into the new
financial year. It feels like it is kind of ancient history.
And then all of a sudden, this money just lobs.
Speaker 2 (02:29):
And because that money is not part of our you know,
regular income, you know, it does feel like we haven't
physically worked for that money. You know, it feels like,
you know, literally you've won some money. It's it's you've
manifested it even But the thing is, in reality, it
is just our own money. It's just been returned back
to us, and we were just overpaid, well we overpaid
(02:52):
tax through the financial year, and it's just been given
back to us. So we somehow seem to treat it
like it's free money, and we're more likely then to
go and blow it and spend it impulsively rather than
actually think strategically, which is a bit of a trap
when you do get as a surprise tax refund that
you weren't expecting, because you don't have that if you
(03:12):
know that you're going to be getting, say a two
thousand dollars tax refund or a five hundred dollars tax refund,
you have that time to go, Okay, well when I
get that refund yep, I will. I got that gap
to actually think, okay, what do I want to do
with that money, rather than going, what a great surprise,
I'm gonna go shopping?
Speaker 1 (03:29):
Yeah? Is that? Is that the biggest mistake with tax
refunds that you had worn against blowing it just treating
it as free money and just going you know what
this is?
Speaker 2 (03:40):
It is not free money.
Speaker 1 (03:42):
But if it's if it's outside of your budget. Right,
it looks.
Speaker 2 (03:46):
It's smoking mirrors. It looks like it's free money, but
it ain't free money. It's your own money just being
given back to you. The atas just overtaxed you and says,
oh sorry, I gave you the wrong change, back your
correct change.
Speaker 1 (04:01):
Yeah, but okay, it's your money, therefore go nuts. Right.
I taught you, Narli, You've taught me a lot. You
have not taught me this, though, No, you have. Let's
do our five ideas. Let's start with number one idea,
number one smart idea, number one, not just any random idea.
Speaker 2 (04:22):
Michael's smart idea. And this holds the latest iPhone.
Speaker 1 (04:27):
Well, yes, but that was a that's a tool for work.
Speaker 2 (04:31):
Technically, yes, it was an investment.
Speaker 1 (04:33):
Indeed, it is idea number one please can I.
Speaker 2 (04:36):
Would be to top up your emergency money. Okay, So
I was actually reading that most Australians, something like one
in three Australians kind of come up with two thousand
dollars in an emergency, which is very very concerning. So look,
even just a couple of hundred dollars put a side
into a separate savings account away from your normal everyday spending,
can massively reduce some financial anxiety and it actually creates
(04:59):
a place to build upon from that point going forwards.
So as she was combak where I read that one
in three couldn't actually come up with even five hundred
dollars in an emergency, not two thousand dollars. That's really
really frightening. Yeah, so yes, this is not the most
glamorous idea, but it's going to help you sleep a
little better at night, and it gives you some breathing room.
(05:19):
And you know, if you get hit with some you know,
a tough time.
Speaker 1 (05:22):
And especially if you're not expecting this refund necessarily or
you are, you're not budgeting for it, so you're not
going to miss it necessarily. If you tuck it away
straight into emergency money. It's not as though it's like
you're having you're wrenching it out of your budget and
trying to kind of clear space for it in your budget,
and you're cutting all of these other things. You were
(05:43):
just reallocating something that has just arrived. So it's probably
the best possible time to do it right, to bring it.
Speaker 2 (05:51):
Come back to your idea about it being free money.
It's like you go to the coffee shop with a
fifty dollar note and you buy coffee, and the coffee
say dollars, and you get back.
Speaker 1 (06:03):
Say forty four dollars. Yes, I was helping you.
Speaker 2 (06:06):
No, no, no, you don't get no. Hang on, you're
not helping me. You actually now nest my idea up.
You get back forty two dollars, and the barista says,
hang on, Michael, stop, I didn't give you the right
change back. Here's an extra two dollar coin that I
didn't give you previously. Is that free money? No, it's
your money, and so therefore you I just killed your idea.
(06:29):
Now of free money.
Speaker 1 (06:31):
Nowhere near as fun as it used to be. But
I do like this idea of the fact that because
you haven't actually been relying on it, or it hasn't
been part of your household budget, it hasn't just been
floating around that it's probably the ideal time to put
it into some of those things that are a little
bit more dull because you're not having to sacrifice anything
for it.
Speaker 2 (06:51):
You know, it's an opportunity to create a bit more
headwind in your financial journey.
Speaker 1 (06:58):
That's idea number one, with including a very confusing amalgry.
Speaker 2 (07:03):
I just came to it, just hit me, and I
just had to share it with you. I feel like
you're still stuck thinking a tax refund is a winning
or a bonus money, and you can it's probably where
you how you bought that new iPhone of yours kind.
Speaker 1 (07:15):
Of still feels like a bonus.
Speaker 2 (07:17):
ID Number two, Please all right, pay down high interest
debt like so credit cards by now, pay later, personal loans,
you know, they are those expenses that really do drain
our cash flow. And credit cards can charge like twenty
percent sometimes I've seen twenty two percent, even a little
bit more. So you've got say two thousand dollars oring
on a credit card and you get a tax refund,
(07:39):
you know, depending on the refund, you potentially are saving
four hunder dolls and interest that you would have had
to pay over the year on that on that loan.
So the benefit of this is is you're facing your
financial demons. You know, you know you need to pay
it off. He's an opportunity to help make a dance
or to help clean it and wipe it away instantly.
That's going obviously going to improve your fine health. You
(08:00):
can start afresh and start building savings and building maybe
investments and obviously reduce your stress levels and improve your
credit store.
Speaker 1 (08:08):
Even is there a risk, right, And I don't mean
to be cynical, no, never. If you do that, you're
just going to build it straight back up again, because
paying it off is one thing, but you need to
also have an adjustment in your mindset at the same time, right,
because otherwise you will pay it down. Yes, you will
(08:30):
not pay the interest then moving forward on that, but
unless you actually change your spending habits, you're just going
to build it straight back up again. And I've seen
this very much firsthand.
Speaker 2 (08:40):
Absolutely, if you don't confront the actual I guess parasite
or the problem at hand that's creating this credit card
dead of course you're going to be back in it again.
This is just an opportunity for you to actually restart.
That's why I said, you know, start with a fresh
plate or turning over a fresh leaf is probably a
better way of saying this. And I really do believe
(09:01):
when you're in credit card debt or any type of debt,
it's so toxic because it kind of keeps you trapped
in that you don't feel good about yourself, so you
go and spend more. Yeah, and you know, this is
why we see people get deeper and deeper into debt.
You know, think, O, well, I'm already in two and
a half thousand dollars with a debt, what's another three
hundred dollars? You know? And then it's oh, well I'm
in eighteen two thousand, eight hundredars with a debt. Well
(09:22):
what if it just goes to a flat three thousand?
And that's where I see people really get themselves into
a hole. So when these opportunities come, you know, you've
got to jump on them, and jump on them quickly
before temptation comes in and go all right, I don't
want to I'd love to go and blow that money
and spend it. But the truth and reality is is
I need to confront this credit card debt and I
(09:43):
need to start working on myself and learn about managing
my cash flow better to fix this so I don't
have The next tax refund I get goes to me,
It goes to my savings, it goes to my investing,
it goes to my super or whatever you want it
to go to.
Speaker 1 (09:55):
I know that we're veering off into credit cards and
things here, but if you were to do that, if
you were to pay down, say you have a thousand
dollars come in from the ATO and you pay that
off your credit card, would you recommend, say, then, reducing
your credit limit on your card by that same amount
so that it limits your ability to keep doing it
or you don't have to do it as a full
(10:15):
credit limit change. A lot of providers allow you to
put in place a spending cap on that credit card.
Is that a smart move?
Speaker 2 (10:23):
Definitely? I think that's a great idea. And I said
a lot of people, you know, if you keep getting
yourself back into this cycle of pay credit card data,
often then find six months out of your back in
it all over again. Perhaps it's time that you don't
actually have a credit card at all, so, you know,
reducing the cap and then eventually canceling it is definitely
a great plan. You know. It's the idea of having
(10:44):
being on a diet, But then your fridge is full
of chocolate and lollies and cheeses and all those delicious
but very naughty foods that don't help us achieve our
weight loss or fitness goals. So why make life harder?
And I don't own a credit card, and I really
like not having a credit card. And that's nothing to
do with credit card debt, just one most thing not
to think about.
Speaker 1 (11:04):
Yeah, okay, that makes sense, all right. So they are
the first two ideas. Let's take a very quick break
and come back with the next three on our list
of the top five smart ideas for using a tax refund?
Can are We are going through five smart ideas for
using your tax refund. This is assuming that you have
(11:26):
received one. Maybe you are expecting to receive one, and
in which case this is just getting in early. So far,
we've had top up your emergency money and pay down
high interest debt at toxic debt, your credit card or
personal loans. Things like that. Smart idea number three.
Speaker 2 (11:43):
What is it invested? My favorite idea?
Speaker 1 (11:46):
Excellent? What are we talking?
Speaker 2 (11:48):
Well, you could look at say a listed investment company,
which is my personal favorite investment. Or you could look
at an ETF exchange traded fund, or even look at
a micro investing account, but obviously don't stay there for
too long. Once your account grows and you're ready to
fly to spread doings, get out of those micro investing apps.
But you know, even you know users to start your
(12:11):
financial journey of investing. You know that one thousand dollars
could be used to buy your first passable shares and
that is the birthplace of your passive income stream, and
then you can regularly contribute and build it upon it
from there. But you've started, and that's the hardest part
done for you through your tax refund. Yeah.
Speaker 1 (12:28):
I was reading some research recently that said that basically,
and I'm paraphrasing here, that even a lot of high
income earners don't start investing because they feel, I haven't
got enough money to get going, even though they do
actually have it. But it's almost a confidence thing. It
is almost just a mindset thing of just kind of
getting going, doing some research and just getting started and
(12:52):
once you've started, then it's easier to continue going. And
maybe this is that that kind of trigger that having
that money sitting there, not how allocated to anything else,
might just be that that little push that you need.
Speaker 2 (13:02):
Definitely, And like the thousand dollars project that I created,
you know, started as just that you literally just hustle
one thousand dollars. That first one thousand dollars was the
hardest to come up with. But once I went and
invested it, it just compounded and just grew, and I
became addicted to watching it grow. And now it's worth
over three hundred and sixty five thousand dollars. Yeah, and
(13:23):
that is literally one thousand dollars at a time.
Speaker 1 (13:25):
That is incredible.
Speaker 2 (13:26):
But it started and that was the hardest part.
Speaker 1 (13:28):
Yeah. And of course remember that everything we're talking about
here is general in nature.
Speaker 2 (13:33):
You guys are my favorite resident is investment company, right, It.
Speaker 1 (13:36):
Is not personal investment strategic product advice. We don't know
your financial circumstances.
Speaker 2 (13:41):
Well, the time frame for your financial goals.
Speaker 1 (13:44):
And this is financial education purposes only, and you should
seek professional advice before making decisions. I got very formal.
Speaker 2 (13:54):
There in the middle of it that was my fault.
Speaker 1 (13:57):
Number four, So that was investing number four or idea
number four. Is this a smart one or a fun
one or somewhere in between.
Speaker 2 (14:03):
It's sexy, it's super okay, So.
Speaker 1 (14:06):
It's neither okay. It is definitely smart, it's not necessarily fun.
I wouldn't describe it necessarily as sexy.
Speaker 2 (14:13):
Well, that's your personal choice. It is. You could use
that money as a one off personal contribution. Now you've
got to be careful with this because if you have
limits in place that you have come close to, and
these limits are per financial year, not per calendar yet,
you just could just double check. But there's also a
way of potentially not doubling your money, but getting a
(14:36):
much better return on your money, and that is by
looking at the government's co contribution scheme. So if you're
earning it's forty seven thousand or four hundred and eighty
eight actually or less, you can and it obviously tapers
off and I think it stops it around about sixty
two thousand if I remember correctly. But you can put
(14:56):
up to one thousand dollars into your superannuation and the
government will put up to five hundred dollars. So it's
like an instant return, guaranteed return.
Speaker 1 (15:07):
That is free money.
Speaker 2 (15:08):
That is free money, and that is super sexy.
Speaker 1 (15:11):
Actually that is quite quite erotic.
Speaker 2 (15:17):
I don't know how I feel about erotic, but I
know I use the word sexy, but six seems a
bit more PG than erotic. But you know, super innuation
is one of the most tax effective long term asset
building vehicles that is available to all Australians, well most Australians,
and really can make a huge impact in improving people's
(15:40):
the quality of people's retirement.
Speaker 1 (15:42):
Yeah, and again, great opportunity to do it when you
suddenly have this extra money as you weren't necessarily expecting,
go for it.
Speaker 2 (15:51):
And also it's away from temptation because you once that
money's in, you can't get it back out, which I
think is a blessing in disguise.
Speaker 1 (15:57):
I completely agree with you on that, ok. Idea number
five we are moving right away from the sexiness of
superannuation into.
Speaker 2 (16:07):
Spending it on self care or something that improves your future.
Speaker 1 (16:12):
So you know, I was not expecting this from you.
Speaker 2 (16:14):
I thank you. I do like to surprise education, upskilling
or even you know, a side hustle idea that you've
been wanting to work on. Now use that money to
buy that equipment, or use that course of that software program.
You know, self help course is a great one. I
recently did one and I absolutely loved it. So these
(16:34):
are things that you can invest your money in. They're
going to hopefully have I guess you could say a
multiplier effect on your income or your potential income. So
that's quite exciting, and you know, I think this is
really important to ask yourself, like, what can I use
this refund to help create more income or help build
my knowledge or my experience or my opportunities to improve
(16:58):
my finances end?
Speaker 1 (17:01):
Oh oh boy? What this No. I'm just thinking that
if you are doing something that is a side hustle
or that is helping you to actually make money, and
you're investing in something that is potentially going to help
make you money, there is a chance that, with advice
from your accountant, that that spending might in fact be
tax deductible as well, in which case then your tax
(17:22):
refund spending becomes tax deductible in the following year.
Speaker 2 (17:26):
That's really really good point I missed that? Have I
missed that?
Speaker 1 (17:30):
You know what? There is a moment in one's life
where the student becomes the teacher. Oh my god, and
I think we've just we just crossed that threshold.
Speaker 2 (17:42):
I'll let you think that.
Speaker 1 (17:43):
Oh thank you. Okay, So there are five ideas. Can
you use it for fun? What can we just.
Speaker 2 (17:49):
Can I mean, god, I'm not the fun police.
Speaker 1 (17:52):
Yes you are, but can we just get a little
bit of it? Like if you're just say is? Because
again I don't want to be kind of silly with it,
but it does make sense right to just go a
little bit at ten percent or something. Whatever I'm going
to spend that, I can actually have a bit of
fun with that, and the rest I'm going to be
smart with because otherwise you run the risk of coming
(18:15):
very boring, and the money side of it can become
a chore.
Speaker 2 (18:18):
Absolutely. Look, it is about balance. So you might say, okay,
and this is why I think it's really important not
to react when you see that in an impulsive manner.
When you see that money, sit down, deep breath. This
is exciting. Yes, this is something you didn't expect. Yes
it's bigger than you thought even but go, okay, how
do I do this? Enjoy some money today and spend
it and feel good about myself, but then also feel
(18:40):
proud of making an intelligent decision that's going to benefit
me for many, many years to come. Don't forget like
there are going to be other tax refunds, hopefully in
the future. But you know, yes, so you know it
might be something like a holiday. It might be you know,
a new wardrobe, or it might be a new piece
of equipment, or it might be a weekend away, or
it might be a massage. Yes, like you do need
(19:03):
to have that sense of fund to help keep you motivated.
As you say, like it makes you very dull and boring,
and I amazingly do agree with that. So the question
I like to ask myself is would I buy this
if it was coming out of my normal after tax
money or not. And that doesn't mean yes or no
to proceed ahead. It means just just have that awareness
that you are spending mindfully.
Speaker 1 (19:24):
Yeah, no, that makes sense. Just very quickly, you mentioned
a couple of times we're talking about investing, We were
talking about adding to your superannuation. If you had a
couple of thousand dollars right that you've received for your
tax refund, just what impact could that make long term?
Speaker 2 (19:43):
Well, if you took say two thousand dollars, and you
went in invested it in to say an ETF, and
you looked at a return, a net return of say
seven percent per annum over a period of ten years,
set and forgetting that just reinvest you have about just
over twenty seven and a half thousand dollars over ten years.
Speaker 1 (20:03):
That's incredible.
Speaker 2 (20:05):
So that's sorry. And I should say that's two thousand
dollars each year for.
Speaker 1 (20:07):
Chan year if you keep on dolls. I assumed that
you were doing the same thing each year with the
same tax return.
Speaker 2 (20:15):
So that one refund and you can go and blow
all your other income if you want, But that one
refund of say two thousand dollars each year is turning
into a significant amount of money, you know, and you
can eventually use that money to help prepare for retirement,
help pay for home loan, you know, help pay for
a holiday. And this is why I was talking about
(20:36):
the consistency and the compounding growth over the long run.
Speaker 1 (20:41):
Okay, if someone is listening to us right now, with
a tax refund burning a hole in their pocket, what
is the one thing that they can go and do
or should do? Single first step they should take Sorry,
I get very pointy, I wave my pen around, I
get very gestural.
Speaker 2 (21:00):
Pause, do nothing, don't let emotions take over. You want
to be clear headed. You wanted to be methodical, rational,
and you want to make sure that you have no regrets.
I remember talking to someone who got a really big
tax refund and they went out and bought a car,
and they said to me, the moment I drove out
of the car yard, I instantly felt like it embarrassed
(21:24):
and regretted what I'd done. And it was too late
because I'd already driven there in the car. So yeah,
and they had to sit with that for that decision
for a really long time.
Speaker 1 (21:33):
Wow. All right, those five ideas they were top up
your emergency money, pay down high interests debt, get started investing,
add to your super And then the one I found
really interesting was that that kind of self care education,
upskilling or getting started in a side hustle, because those
(21:53):
are all basically investments in your own future, which is terrific. Now,
if anybody wants more information from you, where do they?
Speaker 2 (22:01):
Sexy superinuation, It does feel like you are targeting a
very niche audience with that.
Speaker 1 (22:09):
There might be a following for it. They go to
your Instagram.
Speaker 2 (22:14):
Yes, at Sugar Mama TV or at Canna Campbell Official.
Speaker 1 (22:18):
Excellent and you can hear me every day with Sean
Aylmer on Fear and Greed business news you can use.
Thank you for listening to how Do They Afford That?
And remember to follow on the podcast. Tell somebody else
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again next week
Welcome to How Do They Afford That? The podcast that
peeks into the financial lives of everyday Australians. I'm Michael Thompson.
I'm an author and the co host of the business
news podcast Fear and Greed. As always, I'm with Canna Campbell,
financial planner, founder of Sugar Mama TV, the financial literacy
platform that is just about everywhere YouTube, podcast, books, Instagram, threads,
TikTok and more. Hello Canna, Hello, how are you? I
(00:23):
am good, Thank you, and I'm looking forward today's episode
because it is a timely episode because when now a
few months past the end of the financial year and
everyone's hopefully got their tax in hopefully maybe a little optimistically,
but for some, for the lucky ones, tax refunds getting
(00:46):
a bit of money back, right, for some people it
might be a couple of one hundred dollars, maybe a
few thousands.
Speaker 2 (00:53):
Well, I remember reading that the average tax refund that
Australian and Australian gets is around two to two and
a half thousand dollars. But with the gig economy and
obviously hex stits and things like that, it's actually now
the average is a lot lower. It's around about one
and seventy seven dollars fund, so the returns are a
(01:14):
lot lower.
Speaker 1 (01:14):
So if we assume then that the average is somewhere
between those two, that may be somewhere between one and
two thousand dollars. Right, it feels like bonus money, like
free money. And I'm just like, just even as I
say this one money, that's right, I could just see
this that that little twitch in your eyebrow that I
(01:35):
enjoy seeing when something really stresses you out. But how
do we actually make the most of it if we're
thinking of it as bonus money, as free money? Today,
we're going to make a list, because we love a
good list on this podcast. We are going to come
up with five smart ideas to make the most of
your tax refund. But first, why do they feel like
(01:56):
free money? I'm assuming this is a risky mindset.
Speaker 2 (02:01):
Well, it's psychological. You know, the refund it really does
feel like a bonus, particularly if you weren't expecting it
and you you know, discover oh look the aty of
deposited you know, one thousand dollars or two thousand dollars
into my bank account.
Speaker 1 (02:16):
Also, and as you've been paying your tax, the whole
way through the year, and that that year has passed.
Now you're kind of a few months into the new
financial year. It feels like it is kind of ancient history.
And then all of a sudden, this money just lobs.
Speaker 2 (02:29):
And because that money is not part of our you know,
regular income, you know, it does feel like we haven't
physically worked for that money. You know, it feels like,
you know, literally you've won some money. It's it's you've
manifested it even But the thing is, in reality, it
is just our own money. It's just been returned back
to us, and we were just overpaid, well we overpaid
(02:52):
tax through the financial year, and it's just been given
back to us. So we somehow seem to treat it
like it's free money, and we're more likely then to
go and blow it and spend it impulsively rather than
actually think strategically, which is a bit of a trap
when you do get as a surprise tax refund that
you weren't expecting, because you don't have that if you
(03:12):
know that you're going to be getting, say a two
thousand dollars tax refund or a five hundred dollars tax refund,
you have that time to go, Okay, well when I
get that refund yep, I will. I got that gap
to actually think, okay, what do I want to do
with that money, rather than going, what a great surprise,
I'm gonna go shopping?
Speaker 1 (03:29):
Yeah? Is that? Is that the biggest mistake with tax
refunds that you had worn against blowing it just treating
it as free money and just going you know what
this is?
Speaker 2 (03:40):
It is not free money.
Speaker 1 (03:42):
But if it's if it's outside of your budget. Right,
it looks.
Speaker 2 (03:46):
It's smoking mirrors. It looks like it's free money, but
it ain't free money. It's your own money just being
given back to you. The atas just overtaxed you and says,
oh sorry, I gave you the wrong change, back your
correct change.
Speaker 1 (04:01):
Yeah, but okay, it's your money, therefore go nuts. Right.
I taught you, Narli, You've taught me a lot. You
have not taught me this, though, No, you have. Let's
do our five ideas. Let's start with number one idea,
number one smart idea, number one, not just any random idea.
Speaker 2 (04:22):
Michael's smart idea. And this holds the latest iPhone.
Speaker 1 (04:27):
Well, yes, but that was a that's a tool for work.
Speaker 2 (04:31):
Technically, yes, it was an investment.
Speaker 1 (04:33):
Indeed, it is idea number one please can I.
Speaker 2 (04:36):
Would be to top up your emergency money. Okay, So
I was actually reading that most Australians, something like one
in three Australians kind of come up with two thousand
dollars in an emergency, which is very very concerning. So look,
even just a couple of hundred dollars put a side
into a separate savings account away from your normal everyday spending,
can massively reduce some financial anxiety and it actually creates
(04:59):
a place to build upon from that point going forwards.
So as she was combak where I read that one
in three couldn't actually come up with even five hundred
dollars in an emergency, not two thousand dollars. That's really
really frightening. Yeah, so yes, this is not the most
glamorous idea, but it's going to help you sleep a
little better at night, and it gives you some breathing room.
(05:19):
And you know, if you get hit with some you know,
a tough time.
Speaker 1 (05:22):
And especially if you're not expecting this refund necessarily or
you are, you're not budgeting for it, so you're not
going to miss it necessarily. If you tuck it away
straight into emergency money. It's not as though it's like
you're having you're wrenching it out of your budget and
trying to kind of clear space for it in your budget,
and you're cutting all of these other things. You were
(05:43):
just reallocating something that has just arrived. So it's probably
the best possible time to do it right, to bring it.
Speaker 2 (05:51):
Come back to your idea about it being free money.
It's like you go to the coffee shop with a
fifty dollar note and you buy coffee, and the coffee
say dollars, and you get back.
Speaker 1 (06:03):
Say forty four dollars. Yes, I was helping you.
Speaker 2 (06:06):
No, no, no, you don't get no. Hang on, you're
not helping me. You actually now nest my idea up.
You get back forty two dollars, and the barista says,
hang on, Michael, stop, I didn't give you the right
change back. Here's an extra two dollar coin that I
didn't give you previously. Is that free money? No, it's
your money, and so therefore you I just killed your idea.
(06:29):
Now of free money.
Speaker 1 (06:31):
Nowhere near as fun as it used to be. But
I do like this idea of the fact that because
you haven't actually been relying on it, or it hasn't
been part of your household budget, it hasn't just been
floating around that it's probably the ideal time to put
it into some of those things that are a little
bit more dull because you're not having to sacrifice anything
for it.
Speaker 2 (06:51):
You know, it's an opportunity to create a bit more
headwind in your financial journey.
Speaker 1 (06:58):
That's idea number one, with including a very confusing amalgry.
Speaker 2 (07:03):
I just came to it, just hit me, and I
just had to share it with you. I feel like
you're still stuck thinking a tax refund is a winning
or a bonus money, and you can it's probably where
you how you bought that new iPhone of yours kind.
Speaker 1 (07:15):
Of still feels like a bonus.
Speaker 2 (07:17):
ID Number two, Please all right, pay down high interest
debt like so credit cards by now, pay later, personal loans,
you know, they are those expenses that really do drain
our cash flow. And credit cards can charge like twenty
percent sometimes I've seen twenty two percent, even a little
bit more. So you've got say two thousand dollars oring
on a credit card and you get a tax refund,
(07:39):
you know, depending on the refund, you potentially are saving
four hunder dolls and interest that you would have had
to pay over the year on that on that loan.
So the benefit of this is is you're facing your
financial demons. You know, you know you need to pay
it off. He's an opportunity to help make a dance
or to help clean it and wipe it away instantly.
That's going obviously going to improve your fine health. You
(08:00):
can start afresh and start building savings and building maybe
investments and obviously reduce your stress levels and improve your
credit store.
Speaker 1 (08:08):
Even is there a risk, right, And I don't mean
to be cynical, no, never. If you do that, you're
just going to build it straight back up again, because
paying it off is one thing, but you need to
also have an adjustment in your mindset at the same time, right,
because otherwise you will pay it down. Yes, you will
(08:30):
not pay the interest then moving forward on that, but
unless you actually change your spending habits, you're just going
to build it straight back up again. And I've seen
this very much firsthand.
Speaker 2 (08:40):
Absolutely, if you don't confront the actual I guess parasite
or the problem at hand that's creating this credit card
dead of course you're going to be back in it again.
This is just an opportunity for you to actually restart.
That's why I said, you know, start with a fresh
plate or turning over a fresh leaf is probably a
better way of saying this. And I really do believe
(09:01):
when you're in credit card debt or any type of debt,
it's so toxic because it kind of keeps you trapped
in that you don't feel good about yourself, so you
go and spend more. Yeah, and you know, this is
why we see people get deeper and deeper into debt.
You know, think, O, well, I'm already in two and
a half thousand dollars with a debt, what's another three
hundred dollars? You know? And then it's oh, well I'm
in eighteen two thousand, eight hundredars with a debt. Well
(09:22):
what if it just goes to a flat three thousand?
And that's where I see people really get themselves into
a hole. So when these opportunities come, you know, you've
got to jump on them, and jump on them quickly
before temptation comes in and go all right, I don't
want to I'd love to go and blow that money
and spend it. But the truth and reality is is
I need to confront this credit card debt and I
(09:43):
need to start working on myself and learn about managing
my cash flow better to fix this so I don't
have The next tax refund I get goes to me,
It goes to my savings, it goes to my investing,
it goes to my super or whatever you want it
to go to.
Speaker 1 (09:55):
I know that we're veering off into credit cards and
things here, but if you were to do that, if
you were to pay down, say you have a thousand
dollars come in from the ATO and you pay that
off your credit card, would you recommend, say, then, reducing
your credit limit on your card by that same amount
so that it limits your ability to keep doing it
or you don't have to do it as a full
(10:15):
credit limit change. A lot of providers allow you to
put in place a spending cap on that credit card.
Is that a smart move?
Speaker 2 (10:23):
Definitely? I think that's a great idea. And I said
a lot of people, you know, if you keep getting
yourself back into this cycle of pay credit card data,
often then find six months out of your back in
it all over again. Perhaps it's time that you don't
actually have a credit card at all, so, you know,
reducing the cap and then eventually canceling it is definitely
a great plan. You know. It's the idea of having
(10:44):
being on a diet, But then your fridge is full
of chocolate and lollies and cheeses and all those delicious
but very naughty foods that don't help us achieve our
weight loss or fitness goals. So why make life harder?
And I don't own a credit card, and I really
like not having a credit card. And that's nothing to
do with credit card debt, just one most thing not
to think about.
Speaker 1 (11:04):
Yeah, okay, that makes sense, all right. So they are
the first two ideas. Let's take a very quick break
and come back with the next three on our list
of the top five smart ideas for using a tax refund?
Can are We are going through five smart ideas for
using your tax refund. This is assuming that you have
(11:26):
received one. Maybe you are expecting to receive one, and
in which case this is just getting in early. So far,
we've had top up your emergency money and pay down
high interest debt at toxic debt, your credit card or
personal loans. Things like that. Smart idea number three.
Speaker 2 (11:43):
What is it invested? My favorite idea?
Speaker 1 (11:46):
Excellent? What are we talking?
Speaker 2 (11:48):
Well, you could look at say a listed investment company,
which is my personal favorite investment. Or you could look
at an ETF exchange traded fund, or even look at
a micro investing account, but obviously don't stay there for
too long. Once your account grows and you're ready to
fly to spread doings, get out of those micro investing apps.
But you know, even you know users to start your
(12:11):
financial journey of investing. You know that one thousand dollars
could be used to buy your first passable shares and
that is the birthplace of your passive income stream, and
then you can regularly contribute and build it upon it
from there. But you've started, and that's the hardest part
done for you through your tax refund. Yeah.
Speaker 1 (12:28):
I was reading some research recently that said that basically,
and I'm paraphrasing here, that even a lot of high
income earners don't start investing because they feel, I haven't
got enough money to get going, even though they do
actually have it. But it's almost a confidence thing. It
is almost just a mindset thing of just kind of
getting going, doing some research and just getting started and
(12:52):
once you've started, then it's easier to continue going. And
maybe this is that that kind of trigger that having
that money sitting there, not how allocated to anything else,
might just be that that little push that you need.
Speaker 2 (13:02):
Definitely, And like the thousand dollars project that I created,
you know, started as just that you literally just hustle
one thousand dollars. That first one thousand dollars was the
hardest to come up with. But once I went and
invested it, it just compounded and just grew, and I
became addicted to watching it grow. And now it's worth
over three hundred and sixty five thousand dollars. Yeah, and
(13:23):
that is literally one thousand dollars at a time.
Speaker 1 (13:25):
That is incredible.
Speaker 2 (13:26):
But it started and that was the hardest part.
Speaker 1 (13:28):
Yeah. And of course remember that everything we're talking about
here is general in nature.
Speaker 2 (13:33):
You guys are my favorite resident is investment company, right, It.
Speaker 1 (13:36):
Is not personal investment strategic product advice. We don't know
your financial circumstances.
Speaker 2 (13:41):
Well, the time frame for your financial goals.
Speaker 1 (13:44):
And this is financial education purposes only, and you should
seek professional advice before making decisions. I got very formal.
Speaker 2 (13:54):
There in the middle of it that was my fault.
Speaker 1 (13:57):
Number four, So that was investing number four or idea
number four. Is this a smart one or a fun
one or somewhere in between.
Speaker 2 (14:03):
It's sexy, it's super okay, So.
Speaker 1 (14:06):
It's neither okay. It is definitely smart, it's not necessarily fun.
I wouldn't describe it necessarily as sexy.
Speaker 2 (14:13):
Well, that's your personal choice. It is. You could use
that money as a one off personal contribution. Now you've
got to be careful with this because if you have
limits in place that you have come close to, and
these limits are per financial year, not per calendar yet,
you just could just double check. But there's also a
way of potentially not doubling your money, but getting a
(14:36):
much better return on your money, and that is by
looking at the government's co contribution scheme. So if you're
earning it's forty seven thousand or four hundred and eighty
eight actually or less, you can and it obviously tapers
off and I think it stops it around about sixty
two thousand if I remember correctly. But you can put
(14:56):
up to one thousand dollars into your superannuation and the
government will put up to five hundred dollars. So it's
like an instant return, guaranteed return.
Speaker 1 (15:07):
That is free money.
Speaker 2 (15:08):
That is free money, and that is super sexy.
Speaker 1 (15:11):
Actually that is quite quite erotic.
Speaker 2 (15:17):
I don't know how I feel about erotic, but I
know I use the word sexy, but six seems a
bit more PG than erotic. But you know, super innuation
is one of the most tax effective long term asset
building vehicles that is available to all Australians, well most Australians,
and really can make a huge impact in improving people's
(15:40):
the quality of people's retirement.
Speaker 1 (15:42):
Yeah, and again, great opportunity to do it when you
suddenly have this extra money as you weren't necessarily expecting,
go for it.
Speaker 2 (15:51):
And also it's away from temptation because you once that
money's in, you can't get it back out, which I
think is a blessing in disguise.
Speaker 1 (15:57):
I completely agree with you on that, ok. Idea number
five we are moving right away from the sexiness of
superannuation into.
Speaker 2 (16:07):
Spending it on self care or something that improves your future.
Speaker 1 (16:12):
So you know, I was not expecting this from you.
Speaker 2 (16:14):
I thank you. I do like to surprise education, upskilling
or even you know, a side hustle idea that you've
been wanting to work on. Now use that money to
buy that equipment, or use that course of that software program.
You know, self help course is a great one. I
recently did one and I absolutely loved it. So these
(16:34):
are things that you can invest your money in. They're
going to hopefully have I guess you could say a
multiplier effect on your income or your potential income. So
that's quite exciting, and you know, I think this is
really important to ask yourself, like, what can I use
this refund to help create more income or help build
my knowledge or my experience or my opportunities to improve
(16:58):
my finances end?
Speaker 1 (17:01):
Oh oh boy? What this No. I'm just thinking that
if you are doing something that is a side hustle
or that is helping you to actually make money, and
you're investing in something that is potentially going to help
make you money, there is a chance that, with advice
from your accountant, that that spending might in fact be
tax deductible as well, in which case then your tax
(17:22):
refund spending becomes tax deductible in the following year.
Speaker 2 (17:26):
That's really really good point I missed that? Have I
missed that?
Speaker 1 (17:30):
You know what? There is a moment in one's life
where the student becomes the teacher. Oh my god, and
I think we've just we just crossed that threshold.
Speaker 2 (17:42):
I'll let you think that.
Speaker 1 (17:43):
Oh thank you. Okay, So there are five ideas. Can
you use it for fun? What can we just.
Speaker 2 (17:49):
Can I mean, god, I'm not the fun police.
Speaker 1 (17:52):
Yes you are, but can we just get a little
bit of it? Like if you're just say is? Because
again I don't want to be kind of silly with it,
but it does make sense right to just go a
little bit at ten percent or something. Whatever I'm going
to spend that, I can actually have a bit of
fun with that, and the rest I'm going to be
smart with because otherwise you run the risk of coming
(18:15):
very boring, and the money side of it can become
a chore.
Speaker 2 (18:18):
Absolutely. Look, it is about balance. So you might say, okay,
and this is why I think it's really important not
to react when you see that in an impulsive manner.
When you see that money, sit down, deep breath. This
is exciting. Yes, this is something you didn't expect. Yes
it's bigger than you thought even but go, okay, how
do I do this? Enjoy some money today and spend
it and feel good about myself, but then also feel
(18:40):
proud of making an intelligent decision that's going to benefit
me for many, many years to come. Don't forget like
there are going to be other tax refunds, hopefully in
the future. But you know, yes, so you know it
might be something like a holiday. It might be you know,
a new wardrobe, or it might be a new piece
of equipment, or it might be a weekend away, or
it might be a massage. Yes, like you do need
(19:03):
to have that sense of fund to help keep you motivated.
As you say, like it makes you very dull and boring,
and I amazingly do agree with that. So the question
I like to ask myself is would I buy this
if it was coming out of my normal after tax
money or not. And that doesn't mean yes or no
to proceed ahead. It means just just have that awareness
that you are spending mindfully.
Speaker 1 (19:24):
Yeah, no, that makes sense. Just very quickly, you mentioned
a couple of times we're talking about investing, We were
talking about adding to your superannuation. If you had a
couple of thousand dollars right that you've received for your
tax refund, just what impact could that make long term?
Speaker 2 (19:43):
Well, if you took say two thousand dollars, and you
went in invested it in to say an ETF, and
you looked at a return, a net return of say
seven percent per annum over a period of ten years,
set and forgetting that just reinvest you have about just
over twenty seven and a half thousand dollars over ten years.
Speaker 1 (20:03):
That's incredible.
Speaker 2 (20:05):
So that's sorry. And I should say that's two thousand
dollars each year for.
Speaker 1 (20:07):
Chan year if you keep on dolls. I assumed that
you were doing the same thing each year with the
same tax return.
Speaker 2 (20:15):
So that one refund and you can go and blow
all your other income if you want, But that one
refund of say two thousand dollars each year is turning
into a significant amount of money, you know, and you
can eventually use that money to help prepare for retirement,
help pay for home loan, you know, help pay for
a holiday. And this is why I was talking about
(20:36):
the consistency and the compounding growth over the long run.
Speaker 1 (20:41):
Okay, if someone is listening to us right now, with
a tax refund burning a hole in their pocket, what
is the one thing that they can go and do
or should do? Single first step they should take Sorry,
I get very pointy, I wave my pen around, I
get very gestural.
Speaker 2 (21:00):
Pause, do nothing, don't let emotions take over. You want
to be clear headed. You wanted to be methodical, rational,
and you want to make sure that you have no regrets.
I remember talking to someone who got a really big
tax refund and they went out and bought a car,
and they said to me, the moment I drove out
of the car yard, I instantly felt like it embarrassed
(21:24):
and regretted what I'd done. And it was too late
because I'd already driven there in the car. So yeah,
and they had to sit with that for that decision
for a really long time.
Speaker 1 (21:33):
Wow. All right, those five ideas they were top up
your emergency money, pay down high interests debt, get started investing,
add to your super And then the one I found
really interesting was that that kind of self care education,
upskilling or getting started in a side hustle, because those
(21:53):
are all basically investments in your own future, which is terrific. Now,
if anybody wants more information from you, where do they?
Speaker 2 (22:01):
Sexy superinuation, It does feel like you are targeting a
very niche audience with that.
Speaker 1 (22:09):
There might be a following for it. They go to
your Instagram.
Speaker 2 (22:14):
Yes, at Sugar Mama TV or at Canna Campbell Official.
Speaker 1 (22:18):
Excellent and you can hear me every day with Sean
Aylmer on Fear and Greed business news you can use.
Thank you for listening to how Do They Afford That?
And remember to follow on the podcast. Tell somebody else
about the podcast, Betty Yet, send them a link to
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