That time of the year again; the tax season is officially in full swing. For those who don’t know exactly when it runs, this year it started from 1 July and will end 31 October 2018.

For many, filing taxes creates a lot of anxiety and most people leave it to the very last day…I have been here myself! But I believe in facing things head on, whether you do get a refund or you end up owing SARS, just get to it!

For those lucky enough to get a tax refund, have a plan for your refund. Money/Income that is not budgeted for has a way of ‘disappearing’ and leaving you with questions like “where did the money go”!

Here are a few ideas of where you can direct your new found small fortune:

1.  Pay off your debts

Tribe, I think with all the challenges in the economy; VAT up from 14% to 15%, the petrol hike, the stagnant economic growth etc, most South Africans are on the brink of financial crisis. This could be yourself, your friends or even family members. Carrying high debt levels is not only stressful but really just keeps you from living your best life.

So, if you have debts that need to be paid, what better way to pay them off with some ‘free’ money. Don’t go creating more debt once it is paid.

2.  Top up your Retirement Annuity (RA)

With only about 6% of South Africans who can retire comfortably and still maintain their lifestyle, it is a no-brainer to have an RA. You don’t want to be poppin’ bottles today and travelling all over the world but not be able to live like that in your old age when you should be enjoying your golden years.  There are tax benefits to having an RA too. It is never too early to start saving for retirement.

If you do have a Pension/Provident fund with your employer, don’t just make the assumption that this will be sufficient.

3. Pay for your children’s education

We all know school fees bear a big price tag, so what better way to start putting money aside right now for next year’s school fees for you kid(s).  I think it brings such a big relief knowing that important things like school fees are taken care of months and months ahead of time. And if you are comfortable and happy with your child’s school, you can pay for the full year in advance, most schools offer a 10% discount for fees paid a year in advance.

4. Renovate your home

Renovating your home or one of the rooms in your home will not only bring new life to your house but can potentially increase its value. We all know that this could be an expensive exercise; so the ‘free money’ can go a long way!

5. Start or top up your emergency fund

I can never say this enough, having an emergency fund is so important because you never know when a financial crisis is going to happen, and so it helps mitigate against that risk. Not being prepared financially for a crisis could mean you have to take out loans or go into overdraft, which will certainly set your financial journey back.

Try by all means to save for an emergency fund into a separate savings account either by saving a set amount i.e. R800 or a percentage of your income i.e. 5%/8%

 

6. Invest in self development , after-all, you are your biggest asset! 

No matter which stage of your career you are at, self development is key to getting to the next level, whether it be studying further, putting money aside to finally start your business, signing up for a course or seeing a coach to help you get unstuck, it is all well worth it. Continually investing in yourself is one of the best ways to navigating your career and setting yourself apart from the rest.

7. Buy tickets to go see Beyonce…kidding, not really!

All I am saying is, when done responsibly, the choices/options money bring can be a source of enjoyment. So… if the important things are done and out of the way, it’s time to have some fun! Whether its a weekend getaway, spa day, a trip overseas, do it. Life and money is to be enjoyed!

 

The money conversation you should have before you say “I do”!

 

Episode 027: Conversation with Matsi Modise

 

Author: Mapalo Makhu

I want to help women make confident financial decisions and build real wealth.

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3 thoughts on “7 Ways to ‘spend’ your tax refund.

  1. I did number 5 then bought myself and family pizza 🙂
    I decided to adopt Dave Ramsey’s 7 baby steps (which i strongly believe they should be called ‘serious adulting’ steps, there is nothing baby about them..lol..
    I am currently on Step 1 : Building up and emergency fund, my goal is R20K, i am R7K away (provided no emergency in between)..it actually feels good to know, should i suddenly need to change a tyre or some additional medical expense, even an accident (the excess money), i am covered.
    Thank you for the positive influence on many of us.

    Posted on August 13, 2018 at 1:29 pm
    1. Super super proud of you, you are putting in the work…and the feeling? Nothing like it right, when you know things are coming together.

      Keep up the great work Tumi!

      Posted on August 13, 2018 at 2:56 pm
  2. Yo – sock that money away in an IRA double quick. Put it on the market and start earning collecting dividends. Thats far better than spending it on a vacation or a trip you might not enjoy that much and will never be able to experience again.

    Posted on August 22, 2018 at 3:11 am