How to spend your tax return wisely
When your tax return comes in, it can be tempting to splurge on a new TV or celebrate with a nice dinner.
While there’s nothing wrong with spoiling yourself for working hard, sometimes spending any spare money wisely can set you up for a brighter future – which means that in a few years, you get to spoil yourself more! If you have some extra cash lying around in your bank account thanks to SARS, here are some ideas on how to use it smartly.
Pay Off Debt
This is always, always the answer if you have any outstanding debt. Pay off your credit cards, give your bond payment an extra boost, or keep it aside for the impending balloon payment on your car. You’ll rarely make any investments where the interest exceeds that of the interest owed on your debt, so if you do have things to pay off, your tax return should definitely go on that.
Invest it
Put the money into a high interest savings account or chat to an independent financial advisor about how to get the most out of your money. It will take you some time to build it up, but if you’re planning something long-term, then an investment is a great idea. Add in your tax return and bonus whenever you can, and you’ll soon see your money growing.
Start an education fund
If you have kids, you should know that according to business tech, by 2030, a year of university education is set to cost around R176,000 – and school fees are increasing just as fast! With that in mind, it’s really important to start saving for your child's education. Using your tax return in this way gives you a nice down payment to start off with, which you can top up whenever you find yourself with some spare money. It might not be a lot, but just starting can make a big difference to your child’s future.
Save for a rainy day
You never know when you might have an unexpected medical bill, car repairs to pay for or even just find yourself out of a job temporarily. Starting an emergency fund to get you through the (really) tough times is never a bad idea, but make sure that you don’t “dip” into it for minor things. Ideally, you should put it in an account with a notice period of thirty days or so in order to stop impulse buys.
Invest in your home
If you already own a home, a wise way to spend your tax return is by upgrading it – getting new fixings, painting the walls, changing the lights and other inexpensive options can make a world of difference to how your house appears. If you ever want to sell it, that will boost the value.
Invest in yourself and your health
If you don’t have any debt to pay off but still want to do something worthwhile with your tax return, why not invest in your future in a non-monetary way? Take out a gym membership, learn a new language or skill, take a short course or do a post-graduate qualification. Investing in building a happier, healthier, and more well-rounded you is always a good option.