It’s the season of tax refunds in South Africa and there are many people who are smiling all the way to the bank after they received their annual rebate from SARS.
Often times, people do not include their tax refund in their budget as they are not sure how much it is going to be, or if they will be receiving a refund at all.
Therefore, it’s important that you know how to use your tax refund wisely so that you can improve your overall financial portfolio rather than spending on things you don’t need.
So, if you want to know how to allocate your tax refund in a way that optimizes and improves your personal financial planning strategy, then this article is for you.
It is our constant mission to provide excellent tax advice in South Africa, because we know the amazing benefits that you can enjoy from such a process.
Therefore, our tax consultants in Johannesburg have put together 5 ways that you can use your tax refund wisely:
Whether your car needs a new set of tires, your bedroom has a damp issue, or your out-dated kitchen needs a serious revamp – this may be a good time to see to these issues.
Sometimes we don’t have the capital available to address these concerns, so we tend to sweep them under the rug in the hope that they go away, or we forget about them. Receiving extra money that you didn’t plan or budget for is the perfect opportunity to attend to these things, without having to adjust your monthly budget.
Additionally, if you own property, making improvements to it will add value to your future selling price so consider it an investment.
You may have an existing savings account which is looking a bit low, or you might still need to start saving. Either way, this is a good opportunity to give your savings a boost or generous head start. Consider opening a tax-free savings account which allows you to invest up to R36 000 per tax year and you won’t need to pay any tax on the interest you earn in the account.
We know, paying off debt with your hard-earned tax money may be painful, but consider yourself fortunate enough to be in the position where you can reduce your debt without tapping into your savings. Whether you have credit card debt, serious medical bills to pay or you owe your best friend for that time they paid for your dinner, now is a good time to bring down your debt or settle it entirely if that’s possible.
Perhaps you have been sitting on a great business idea which can start to generate you some considerable income on the side, you can use your tax refund as seed capital for this venture. Consider this an investment because in doing so, you could be securing yourself a regular income and who knows, maybe your small idea turns into something big and you can finally live your dream of working for yourself, doing what you love!
Maybe there is a course you have been wanting to do and haven’t been able to afford just yet. Your tax refund may finally make it possible to further your education in your chosen field, or to learn something new which will support the direction you want to take in life. Either way, investing in quality education is ultimately a priceless activity as it can open several doors for you going forward. Don’t think about it, just do it! Otherwise, if your children (or future children) are more important to you, why not invest in an education fund to make tertiary education possible for them when the time comes around?
We know that it may be tempting to go on a spending spree when you receive your tax refund, but there are many other more valuable ways of using that money.
However, if you don’t have bad debt, your children are all grown up and you are in need of a holiday, there is nothing wrong with booking your dream destination using your tax refund.
Our financial advisors are happy to provide you with all the advice you need to make sure you get the most out of your tax money.
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