Before you splurge: acting wealthy versus being wealthy

There's a celebratory vibe in the air in Australia post-June, when tax refunds start hitting bank accounts. With most taxpayers receiving a refund, you're probably more likely to shout a round or splurge on someone's birthday; everyone starts upgrading their cars and wardrobes; you start thinking that investing in a $5000 electric bike really does tick every box.

But before you splurge on new wheels, heels, or a coffee machine that comes with everything short of a barista, it's worth considering whether you're into acting wealthy, or being wealthy.

Acting wealthy is often about appearances. It often involves living beyond your means and an illusion of wealth for social validation. Being wealthy means security and independence. It involves considered decisions about your finances for the long-term, and getting real about what you can do differently today to bring you the best outcome overall.

If you're convinced that being wealthy is the goal, here are 4 smart strategies for using this year's refund to kick start your plans for future wealth:

1. Get rid of the debt: This probably feels like the least exciting option for a refund you can think of. Whilst high interest loans, credit cards, and buy now pay- later plans may help you act wealthy, they don't contribute to your wealth in a practical or psychological sense. This is our number one smart move.

2. Paying down your mortgage (A boss move): Along the same lines, it won't bring the glamour or the thrills, but if your mortgage interest rate is higher than you can earn on any savings account - which is the case for lots of Aussies - then reducing the cost of your biggest asset is a clever strategy.

3. Invest in yourself: Using your refund for education and personal development could boost your career, or open the door to a new industry or side hustle. In a practical sense, adding certification to your resume often increases your long-term earning potential, and that's setting yourself up for success.

4. Compound it: We've talked about the beauty of compounding before, but it really is the gift that keeps on giving. Our Blossom App is just one of the options worth investigating. With Blossom Save offering daily compounding returns, you invest, you earn a return, you leave it invested, and then you earn a return on your principal investment, plus your return ... it has a snowball effect.

Though we totally agree you'd look great in a pair of AirPods Max headphones, our wish for you is a refund that contributes to your long-term wealth, and to a future that's prosperous and fulfilling.

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Sisters Ali & Gaby Rosenberg are the co-founders of Blossom App.