Let’s Talk about Money
- People save for different reasons – understand your reasons
- There is a difference between saving and investing
- Save first and spend second
Why is talking about money so hard for us sometimes? It’s become a taboo subject and not something to bring up in polite company.
We believe it’s time to break the silence. Sharing our stories and lessons learnt could help other people make better, more informed decisions and encourage better financial habits. That’s why, in celebration of Women’s Month we hosted an open and engaging discussion about the art of saving in a busy, cluttered world.
Hosted by Ondela Mlandlu, the panel consisted of Tracy Jensen, Investment Analyst at Nedgroup Investments; Mary J Fourie, Life Style Financial Planner, coach and facilitator and; Pamela Makhubela, Attorney and Conveyancer at STBB.
If you missed it, you can catch the full recording on our YouTube Channel.
If you would rather have the cheat-sheet, we have highlighted some of the best financial tips from the session below.
People save for different reasons – understand your reasons
Finances and savings can be very intimidating – especially for people who aren’t used to saving. Often it is hard to commit to a savings or investment plan if you don’t actually know
what you want to do with your money.
This means getting curious about why you spend money on the things that you do. Are you making conscious choices? Are you tracking your spending - and do you plan in advance when it comes to money?
Thinking about all these things helps you get perspective on what is important to you and whether your financial behaviour is helping you to achieve it.
There is a difference between saving and investing
Saving and investing if often used interchangeably which can be confusing. Saving is generally used for something in the near future – for example, buying a new car or a birthday party.
Investing is about the longer-term. When you invest, you are buying shares in a company or in businesses that you think are really going to grow over time. It requires staying committed to that growth journey for the appropriate amount of time in order to see the returns. Investing is appropriate for long-term financial goals like saving for a child’s university education or retirement.
When is the best time to start?
Now! Women and men can get into investing at any time. In this case there is no time like the present. Often people tend to think that investing is something they will start later or when they have some more money, and this ‘later’ often becomes an elusive starting point.
The important thing to remember is that you can start early, and you can start with small amounts. There are so many options of investments to choose from that suit different budgets and financial goals, so start somewhere, talk to a financial advisor if you need assistance - then commit to the process and allow yourself to develop healthy savings habits.
I earn so little. How can I save?
The reality for some people is that they simply don’t have any money left over at the end of a month to save. In this case, you can still work on cultivating a savings habit.
Think about it as investing in yourself. There are things you can do that don’t cost money or look for ways to develop your skills so that you can earn a higher income and get to a place where you have a little bit more money to save.
Be patient with yourself. Start where you can and slowly increase the amount over time. Commit to the process, write it down and stick to it.
Save first and spend second
We are generally used to spending first and then saving what is left, but to create a sustainable savings habit, we should start saving first and spending second.
The debit order can be so powerful in this instance. Set up a debit order for an amount that you want to save each month. Once it’s going you won’t need to think about it each month and the money will go off your account before you are tempted to re-allocate it elsewhere. It’s easier to commit your future self. So, go ahead and set up that debit order now, you’ll see the benefits down the line.
I’m close to retirement… what if it’s almost too late?
If you have not saved much yet and you are close to retirement, the best thing to do is to look at what else you can do to earn some income. Link this to your passion and to something that fuels you and it will also be good for your general wellbeing and bring you meaning and purpose during the retirement life-stage. In the meantime, you need to do the heavy lifting and save, save, save. Save whatever you can because every bit you save now will take some pressure of in the future years.
What is the best way to save for my child’s education?
Open a tax-free investment in their name. You have a longer time horizon for this investment and the savings on the tax will be significant. Then invest in a unit trust from a reputable asset management company that offers a range of funds across the risk spectrum so that you can find the fund or funds that are best suited for your financial position. As a general rule, for this kind of investment, look for a lot of shares and some global exposure.
Also consider the cost of early education rather than just university education and make sure you are planning for this. It’s actually often more expensive to send a child to private school than it is to send them to university.
Finally, give yourself permission to enjoy the fruits of your savings habit
Saving and investing requires commitment and discipline – but we all save for a reason and it’s important to be able to celebrate our saving successes along the way. This doesn’t mean emptying your account or investments frivolously to go shopping every Friday.
It means giving yourself permission to take a small portion of your savings at certain intervals to do something fun for yourself. This will help you stay motivated to the process and enjoy becoming more financially savvy.