Did you know July was National Savings Month? A great time to take a closer look at our coins and just how to better mitigate our spending habits.
Recapping on Savings Month
Did you know July was National Savings Month? A great time to take a closer look at our coins and just how to better mitigate our spending habits.
Saving is a skill we all need to master, no matter our background. If we want to live a life of ease, then we ought to learn how to make our money do what we need it to so that we have more fulfilling, comfortable lives. Since July was National Savings Month, there is no better time to outline some key savings approaches to help you identify just how you would like your money to work for you.
July - National Savings Month: Overview
The Saving Institute of South Africa (SISA) partners with financial experts, NGOs, financial services companies, and government to encourage a saving culture in South Africa by launching an annual campaign that focuses on raising awareness of the benefits of short, medium and long-term planning. July has become a national savings month where over and above driving this awareness the campaign inspires positive financial behaviour for consumers.
To date the campaign has created webinars in South African languages that cover different aspects of financial literacy such as how to save money and budget more efficiently, rebuilding your finances beyond the pandemic in the 2020 series as well as tips for saving as a student, and money matters for entrepreneurs in the 2021 series. SASI Chairperson Prem Govender said, “South Africa still has one of the lowest Household Savings Ratios in the world. At SASI, we believe a strong focus on financial inclusion by improving financial literacy across the population is key to improving this ratio.
In our increasingly tough economic environment, we need to find ways to save and avoid the credit trap. As the economy gradually recovers, interest rates may rise over the short to medium term, which will make paying off debts more difficult. We need to avoid financial blind spots and drive a savings culture to break the cycle of intergenerational debt.”
Save Money By Having Accountability
One way to ensure accountability is to have a money buddy. A friend who can help keep you accountable for reaching your financial goals, someone who is on the same journey of financial freedom and well-being as you are so you can share your financial goals and the ways in which you plan on reaching them with each other. It becomes easier to stay on track if you have someone to report to each week or month, depending on the system that works for you both. When looking for a money buddy you want to find someone you are comfortable sharing your goals with, someone you trust and admire. Your buddy has to be someone who is also actively working towards their goals and is open and comfortable with sharing their journey with you.
Save By Automating Your Savings
Assuming you have clear financial goals, you have created a monthly budget and are now actively working towards meeting your goals by identifying how you want to save money, a good way to ensure that you always contribute to your savings account is automating your savings. This allows you to put a debit order on your bank account into your savings account, making the transaction seamless and ensuring a healthy saving habit.
Save By Shopping Around for Financial Services
The relationship you have with your bank or financial advisor is a personal one and you need to think thoroughly about who you want to have help you manage your money. As you begin your journey to financial freedom and well-being you want to make decisions that are right for you and that make sense for your financial goals. When shopping for financial services you need to understand the types of services the financial institution offers and make accurate comparisons. You want to earn the most interest on your savings and taking your time to peruse different services will be advantageous. Hippo.co.za compares several financial products and financial service providers to help customers get the best deal for them and save money. RCS offers insurance products for different areas of your life and provides a store card that gives you access to exclusive offers and promotions on South Africa’s biggest independent shopping network of over 26 000 stores.
Start Saving For Retirement Today
It is typically advised to start saving for retirement as soon as you can because the sooner you begin the more funds you have available in your golden years. People are often focused on their very real daily expenses, but it is worth considering the kind of life you want to live in the future. Setting up a retirement fund that will help you maintain the lifestyle you live right now well into your retirement is therefore important. If you start contributing to a retirement fund at a later stage in your life it will take a greater portion of your salary to achieve a suitable amount of retirement income.
Here are different types of investment products that you can ponder for setting up a retirement fund:
- Retirement Annuity: This investment is designed for people who want to save towards their retirement and can be in addition to other funds provided through your employer. You can find reliable retirement calculator tools to help you prepare for retirement.
- Pension fund: A pension fund is a benefit where an employer makes contributions to funds for the purpose of funding employees after they retire. This fund may allow additional contributions by the employee which are deducted from wages.
- Savings accounts that can generate interest: Contributing towards a savings account that generates interest such as compound interest over time can result in a significant money pot for retirees.
- Provident Fund: Workers and employers both contribute to this fund. This money is then managed by the government and withdrawn by retirees or their surviving family members. This fund can also be paid out to disabled persons who are not able to work.
- Preservation Fund: This fund allows investors to transfer their pension or provident funds if they have been dismissed, retrenched or resigned from their workplace. You have to transfer the full amount of your retirement fund into a preservation fund.
- Tax-free investments: Tax-free investments are free of income, dividends and capital gains tax on the return of these investments. An investor may only contribute a maximum of R33 000 per tax year, with a lifetime limit of R500 000 per person. Examples are fixed deposits and retail savings bonds.
Things to keep in mind when getting started with retirement planning:
- Budget: A budget helps you manage your money by knowing what you are earning and what you are spending.
- Automatic transfers/debit order: Setting an automatic transfer is useful for committing to your budget and overall financial goals.
- Emergency account: An emergency account can be used to save money you may need for those rainy days or when you need to supplement your income or retirement fund.
- Pay down debt: It is important to pay off debt as this affects your credit score and your financial health.
- Get help with retirement planning: There are numerous channels that aid investors with retirement planning such as:
- Easy Equities
- Outvest
- 10x
Tax Prep Checklist
Tax season began on 1 July 2022 and closes on 31 October 2022. To ensure your filing process is smooth, make sure you have your IRP5/IT3(a)s and other tax certificates such as your medical certificate, retirement annuity fund certificate, and related documents.So, if you missed Savings Month, make today the beginning of your journey towards a bright and unrestrained financial future.
