24 Jul 6 ways to ‘spend’ your tax refund
I do both my own and family’s tax returns (yes, they trust me like that) and every year without fail, I get some money from good old SARS. I get so excited at the thought of getting money from SARS, I even plan what I am going to do with the money J !!!! I know you are guilty of it too!
In the 2015 tax season SARS paid out 1.82 million refunds to the value of R15 billion – perhaps you too were lucky enough and got a piece of the pie that year.
Here are some suggestions of how you can ‘spend’ your tax refund:
- Build an emergency fund – because you never know what life will throw at you, having some rainy day money goes a long way. The rule of thumb is that you should have at least 6 months’ worth of salary put away for any type of emergency, this could be retrenchment, car breakdown or even illness etc.
- Invest for a fabulous Retirement. Put the money into your Retirement Annuity, better yet, if you do not have one, start one. Research shows that only 6% of South Africans retire comfortably, you want to be part of the 6%…ladies, you don’t wanna be a broke granny!
- Start a unit trust, tax-free savings account or Exchange Traded fund investment – either one of these investment vehicles is simple to setup and easy to access should you wish to. R500 is normally the minimum monthly amount required but you can make a lump sum contribution as well. You can do this through companies like e.g. Stanlib, Coronation, Allan Gray etc. and for Exchange Traded Funds (ETFs), SATRIX is a good platform… go ahead, treat yourself!
- Pay off your debt – while this may not be the most exciting way to spend your tax return, the benefits cannot be ignored. You get to save on the interest charged, which can be quite expensive. Debt is not cool, period.
- Invest in yourself – buy books that will help you with your personal development, sign up for the gym…and actually go! Or register for that course you have been thinking of. The best investment you can make is in yourself.
- Invest in quality time with your family – you work hard, you do your best. You deserve a break. Take a sho’t leftnyana with your loved ones even if it’s just for a week or top-up your planned international trip with your hard earned money from SARS … enjoy!
Even though your tax refund might make you feel like you have just won the lottery, spending it purposefully is still the best way. Financial freedom comes only when one is disciplined and makes sound decisions about their money.