Januworry might be over but many people might not be free from the taxing cost of living under President Cyril Ramaphosa's economy. With many looking for methods to save up for long-term goals or grow their wealth, with the looming threat of higher tax and fuel levies, is it still possible to save money?
To help improve your spending habits, Adrian Hope-Baille, the founder of investment platform Fynbos Money, offers five easy to follow tips to help you start the new year with confidence that your money is doing the most for you.
1. CUT OUT UNNECESSARY DEBT
The most important rule in personal finance is to spend less than you earn. If you’re over-spending and living off debt, that’s the first thing you need to address. Two things you can do to help you get started are:
Cut up the shop cards and focus on paying off those accounts as a priority. Then aim to save up for any big expenses this year instead of buying on credit.
Try to figure out where you’re able to cut back and get control of your budget.
2. CHECK YOUR EMERGENCY FUND
Life is unpredictable. An emergency fund can shield you from financial stress when the unexpected happens, whether it’s a car repair, medical bill or sudden home maintenance. Aim to save 3—6 months of living expenses, tailored to your unique circumstances, in an account earning enough to beat inflation but also allows you quick access to your cash.
3. UNDERSTAND AND MANAGE YOUR SAVINGS RATE
Your savings rate is the percentage of your income after tax that you are putting aside for long-term saving and investing. It’s a popular concept among financial planners in the US but not something many people measure or track in South Africa. One of the most effective things you can do to grow your long-term wealth is figure out what your personal savings rate is and then aim to increase it a bit each year as your income increases.
4. MAKE YOUR MONEY WORK HARDER
Your hard-earned salary deserves more than sitting idle in a fixed-interest savings account. If you’re putting money away for a long time, make sure you take advantage of a tax-free savings account that enables you to invest in the market (shares, not just a bank savings account).
5. REVIEW YOUR INSURANCE
Life changes and your insurance policy should reflect that. You might have got married, moved house, had a baby or launched a business and an annual policy review ensures you’re appropriately covered and getting the best deal. Adjustments can also help you avoid paying for unnecessary coverage while staying prepared for life’s twists and turns. Remember everything is negotiable. Don’t just accept annual premium increases without a fight. That car you’re insuring has gone down in value, why should the insurance go up?