[imagesource: Getty]

Finding the right balance when it comes to money can be difficult, especially when you don’t have a lot of knowledge on how to properly manage your finances.

Then there’s the fact that when you’re living through a pandemic – and when there is an uneasy sentiment regarding economic stability, prioritising smart financial habits over lifestyle spending and instant gratification buys can seem abstract and unimportant.

But, it is important – undeniably important.

South Africans are notoriously bad at saving for their golden years. Roughly half of retirement fund members are faced with a pension of less than one-fifth of their pre-retirement salary, and only 6% have accumulated around 75% or more of what they earned when still working.

Forbes recently looked at how much Millennials should have saved by each age, and it makes for depressing reading.

Let’s read those basic guidelines together and wince as one:

• During your 20s you should aim to accumulate 25% of your overall gross pay.
• By 30, you should have saved the equivalent of a year’s salary.
• You should have double your annual salary saved by the time you’re 35
• By the time you reach 40, you should have accumulated four times your annual salary

Wow – the percentage of South Africans who will have saved double their annual salary by the age of 35 must be infinitesimally small.

Sorry, four times your annual salary tucked away by the age of 40? Alright then, sure.

Clearly, these numbers aren’t realistic, especially in our economy. Freelancing, part-time employment, and informal sector employment is increasingly common these days, and doesn’t come with a built-in retirement fund.

According to IOL, retirement funds use a ‘replacement ratio’ when calculating whether or not you’re on track to have enough saved for when you stop working.

By way of example, if your pensionable salary is R20 000 before you retire, and if your savings amount to a pension of R4 000 a month, then your replacement ratio is 20%.

A recent Member Watch survey shows that the average South African is nowhere near prepared to live comfortably during retirement:

Image: Member Watch

It’s sobering to look at the figures, but you don’t have to tackle the problem alone.

Firstly, if you didn’t have the cash or the foresight to start saving when you were younger, don’t buy into the common myth that you’re too old to start now.

The reality is that it’s never too late, especially if you now have the means to bring an expert on board to help you maximise your, and your family’s, personal wealth.

Additionally, one of the greatest gifts that you can give your children is an education in managing their finances and saving. This is easily done with Consequence Private Wealth taking care of everything you and they need to build healthy financial habits.

They’re never too young, and you’re never too old, to start saving for the future.

[source:forbes&iol]