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Two weeks ago, tax season officially opened, meaning individual taxpayers have until November 23 to file their taxes with SARS.
Save yourself the horrors of heading to a branch and do it via eFiling, if you can. I did mine, and within 72 hours my tax refund had touched down in my account.
The temptation to splurge and stock a bunch of online shopping carts is strong, but that’s the sort of thinking that gets you a stern talking-to from a financial advisor.
Any financial services provider with a proven track record will tell you that decisions made today will have a massive impact on financial security down the line.
With that in mind, let’s take a moment to consider Moneyweb’s planning basics, aimed at encouraging saving during a time in which most are feeling the strain.
The pitfalls of cutting costs
Financial advisors have noticed an increase in queries from clients on reducing their retirement fund contributions, premiums and cover amounts as people try to find ways to cut costs…
For those who have made changes during the pandemic, it will be vital to review investments and policies once their financial situation improves.
Saving a few hundred here and there may be a necessary measure, but those missed savings only compound down the line.
The importance of an emergency fund
When setting up an emergency fund, you need to try to save any monthly disposable income remaining from your monthly budget.
Investors should aim at building up an emergency fund of three to six times their monthly salary.
Six months worth of salary tucked away? In theory, that would be lovely.
At the very least, any funds saved should be readily accessible, rather than having to draw from a retirement annuity (RA) or tax-free saving account (TFSA), both of which would come with their own penalties
The importance of reviewing policies regularly
You might have cover in your personal capacity and through your employer, for example disability income protectors and life cover.
If you have policies with similar benefits, this is a good time to review them and make sure that you are not over insured.
It’s also worth checking that your current insurance policy is still in line with market prices.
The importance of budgeting
If you are struggling to cover all your expenses, completely relook your current situation. Start your budget from scratch, including essential needs only. Try to adapt to your new circumstances. Don’t work with what you once had – work with what you now have.
Nobody likes waking up to find a slew of debit orders taken off, but if you know exactly what you’re in for each month, it makes working around that a little more manageable.
Finally, one that is so important – saving from a young age is beneficial
While it might be difficult for young investors looking at starting their financial planning to take their first step in the midst of the effects of the pandemic, it is definitely better to start sooner rather than later.
Poor spending habits are not easily broken.
No matter how small the amount you start with, setting the wheels in motion now is pivotal.
It’s also a journey that one doesn’t have to go on alone, and getting your financial affairs in order doesn’t have to be a daunting prospect.
Authorised financial service providers like Consequence Private Wealth can help with the crucial decisions – investment management, estate planning, offshore advice, and more – that will bear fruit down the line.
[source:moneyweb]
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