Fi­nan­cial fit­ness

Public Sector Manager - - Contents -

Al­ter­na­tive sav­ings so­lu­tions

Many South African con­sumers are start­ing to re­alise the im­por­tance of longterm sav­ings.

“Most South Africans strug­gle to save not only due to in­come chal­lenges, but also a lack of willpower and com­mit­ment,” said Prem Goven­der, chair of the South African Sav­ings In­sti­tute (SASI).

Goven­der was speak­ing at the launch of SASI July Na­tional Sav­ings Month.

SASI pre­sented 12 ways in which South Africans who have dif­fi­culty in sav­ing, can save.The key is au­to­mated sav­ing.

Al­ter­na­tive sav­ing meth­ods

Set a tar­get: Many of us do not save be­cause we do not have set tar­gets. It is im­por­tant to set and write down im­por­tant sav­ings tar­gets such as an emer­gency fund, a hol­i­day fund and other tar­geted sav­ings. Do you know your tar­gets?

Au­to­mated sav­ings: Debit or­ders to sav­ings ac­counts al­low au­to­mated sav­ing.You can set up debit or­ders, tax-free sav­ings ac­counts, 32-day no­tice ac­counts and unit trust ac­counts.

Baby gifts: You can seed a child's fu­ture sav­ings by re­quest­ing new­born gifts of cash to de­posit into tax-free sav­ings ac­counts.You could even take out a re­tire­ment an­nu­ity for a baby. Chil­dren: Open tax-free sav­ings ac­counts for all your chil­dren to max­imise the ben­e­fit they re­ceive from these ac­counts. Set up debit or­ders to con­trib­ute to these ac­counts as they grow up to­gether with cash gifts they re­ceive on birthdays, etc.You can en­cour­age grand­par­ents and other fam­ily to also con­trib­ute reg­u­larly.

Thir­teenth cheque: Ask your em­ployer to save for a 13th cheque, to be paid to you in De­cem­ber, by low­er­ing your salary. This ex­tra pay cheque will al­low you to ride out the fes­tive pe­riod and New Year ex­penses with­out a ma­jor im­pact on your fi­nances. Pen­sion fund con­tri­bu­tions: When start­ing a new job, ask your em­ployer to de­fault to the high­est al­low­able re­tire­ment fund con­tri­bu­tion per­cent­age of your in­come.You can also ask your em­ployer to re­view your cur­rent con­tri­bu­tion. Re­tire­ment fund con­tri­bu­tions are tax de­ductible an­nu­ally up to

R350 000.

Group sav­ings: Start or join a stokvel or in­vest­ment club with fam­ily and friends.The group will help you de­velop the dis­ci­pline needed to be a reg­u­lar saver. Re­tire­ment fund state­ment: By re­ceiv­ing your re­tire­ment fund state­ments monthly or quar­terly, you can be en­cour­aged to keep track of your sav­ings to en­sure that you have suf­fi­cient in­come when you re­tire.

Sav­ings buddy: Ask your part­ner or a friend to be your sav­ings buddy, and reg­u­larly dis­cuss your sav­ings jour­ney to­gether. By hold­ing each other ac­count­able, you can help each other grow wealth.

In­for­ma­tion pro­vided by the South African Sav­ings In­sti­tute

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