Taxpayers who filed their tax returns now know if they owe the taxman or if Sars is giving them money back. If you are lucky enough to get a tax refund, leave it in the bank, take a deep breath and think before splurging it.
Farzana Botha, senior communications manager at Sanlam Risk and Savings, says for some South Africans, tax season comes with a welcome surprise: a refund from Sars. “It can feel like a small windfall in a tough economy and it is often tempting to spend it all at once.
“Maybe you have been eyeing a new gadget, planning a weekend away or just need to catch up on some monthly bills. But before that refund disappears, take a moment to think: what if it could be the stepping-stone you need to build real financial momentum?
“The biggest barrier to financial progress is not how much you earn but how much progress you make.”
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Psychology behind spending vs saving
She points out that there is psychology behind spending compared to saving. “It is completely natural to want to enjoy your refund right away. Behavioural scientists call this present bias, the tendency to prioritise immediate rewards over future benefits.
“In a high-stress financial environment, it is even more likely. But using your tax refund wisely, especially when it is not part of your regular income, can be one of the easiest ways to boost your long-term financial confidence. Momentum starts with one smart move and your tax refund might just be it.”
Botha says your tax refund is a rare opportunity to press reset or even get ahead financially, especially if you are not living with much room to breathe.
“Treat it as a chance to prioritise your future self and not just your current needs. However, it is also okay to enjoy a small portion of it now as a well-deserved treat because it can boost motivation and make your financial goals feel more sustainable.”
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Why you should save your tax refund
Why should saving be your first thought? Botha says in a climate of rising living costs, saving can feel out of reach, but a tax refund creates a moment of possibility. Whether it is R1 000 or R10 000, it can be a springboard towards greater financial confidence. And with a plan in place, even a small amount saved now can grow into something substantial down the line.
“Often, people think you need a lot of money to start saving. But in reality, it is about consistency and intention. A tax refund, no matter the size, can make a real difference when used smartly.”
The trick is not doing everything, Botha says. “It is doing one smart thing now that sets you up for more.”
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Botha shares these momentum-building ways to put your refund to work:
Pay off expensive debt, especially if you are stuck in a debt cycle
Instead of investing, consider whether you are paying 18% or more on your credit card. That is a guaranteed return if you pay it off. Use your refund to end the debt spiral as it is often the highest impact move you can make.
Plant the seeds of your future freedom, even if it is just R500
Do you think you need thousands to invest? You do not. Whether it is a tax-free savings account or a retirement annuity, the trick is starting. With the right structure, even small deposits benefit from compounding and in some cases, future tax relief.
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Fund a holiday or school fees
If you know an expense is coming, pre-fund it. This helps avoid taking on new debt later or dipping into your emergency fund. This way you are essentially buying future peace of mind at today’s price.
Invest in skills that boost your earning potential
Spend you tax refund on a course, a certification or a side hustle starter kit. Using your refund to boost your future income is one of the most powerful uses – it is a return-on-you.
Give with intention – and receive the benefit too
Donating to registered charities can create impact and offer tax deductions, meaning you multiply your refund’s value while helping others.
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Make saving your tax refund feel like a win
Botha says saving does not have to feel like a punishment or a missed opportunity to spend. “In fact, building the habit of starting with something like a tax refund can feel empowering. It is a signal to yourself that you are in control and making decisions that benefit you long after the money is spent.
“One of the easiest ways to keep saving top of mind is to automate it. Set up a debit order into a savings or investment account, so the money leaves your transactional account before you’re tempted to spend it.
“Saving should be as easy as spending – and just as satisfying. The more we can simplify saving and make it part of our money habits, the more we empower ourselves, our families and communities to move from surviving to thriving.”
The biggest barrier to financial progress is not money but momentum. Botha says a tax refund gives you both.
“It is your moment to reset, invest or get ahead. And if you are unsure where to start, speaking to a financial adviser can help you align this one-off windfall with your long-term goals.”