According to the 2017 Old Mutual Savings and Investment monitor, there is an ever-growing “sandwich generation” who are saving less and less. The sandwich generation is those individuals aged between 31 and 49 who are caring for children as well as elderly family. This generation should be saving, but most of their disposable income is spent on current financial responsibilities and debt.

Here’s some solid advice* for saving and cultivating a savings mindset.

Start with what you have as soon as you can

 Keeping track of your expenses (budgeting) is a non-negotiable to get into the habit of saving. If you don’t know where your money is going, you will always have an excuse not to save. You might be surprised how much cash you are spending on takeaway coffees and snacks every month.

There are plenty of budgeting tools around, from apps like 1Money, to Excel spreadsheets and good old fashioned memos.

Once you know where you can make adjustments to your spending, you should look at putting away about 5 – 10% of your income towards your goals or an emergency fund. If you don’t have 5% left over, save 2%.

Steer clear of bad debt

Whenever possible, don’t make debt to purchase clothes, furniture, food or other consumables. Not only will most of these purchases give you fleeting enjoyment, but due to it being interest-bearing, you will also be paying for it long after it’s lost its value.

Rather focus on point 1 and get into the habit of setting financial goals and saving towards those goals.

Make use of tax-free savings accounts

By introducing Tax-Free Savings Accounts (TFSAs) in 2016, the South African government through national treasury is trying to encourage individual savings. All proceeds, which includes interest income, capital gains and dividends from these accounts, are tax-free. Individuals are permitted to open two tax-exempt savings accounts per year. These accounts can invest in equities, fixed income accounts or both. However, the total contribution per year that qualifies for an income tax exemption is R33 000 on interest earned, up to a maximum of R500 000 per lifetime, though the account balances including interest can exceed R500 000 in a lifetime. Any amounts withdrawn from these accounts cannot be replaced and still get the exemption.

 If possible, buy your first property, versus renting

 Investing in property is always a good idea. Even though it might be more expensive than renting – if you are willing to buy a smaller place in an area that is good for first-time homeowners, you will be better off having invested your hard-earned cash into a property: the value of which might very well later count towards a deposit for your second, bigger property, or which you will be able to rent out.

Review your insurance and policies annually

Once a year, contact your insurance provider or broker to ensure your details are up to date and to see if there is anywhere on the policy you might be able to save.

It’s also a good idea to review your policies and investments. If you don’t have a broker or financial advisor who can do this for you, you can use Verifi, a unique online tool that can help you find and review your existing policies by merely completing their simple online form.

Find a reputable financial services provider

 Partnering with an accredited financial service provider and advisor for the long-term will enable you to have your finger on your financial portfolio, and access to solid advice as your financial situation and the economy changes.

Always make sure your chosen provider is an accredited FSP by requesting their FSP number or certification.

Springpoint Finance

Springpoint Finance (FSP No. 43870) is a national independent brokerage, specialising in tailormade long-term insurance and wealth management.

Started by industry experts 2011, Springpoint was launched with a vision: get an overview of a potential clients’ financial portfolio before an experienced financial advisor makes initial contact telephonically, to offer an informed and convenient service. We aim to give our clients much-needed peace of mind by assessing their individual needs with Verifi, our unique online tool.

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The information contained in this article is of a general nature and intended as a guide only. It is neither to be construed as financial advice nor to be regarded as a definitive analysis of any financial, legal or other issues. We recommend you consult our financial planners/advisors to take into account your particular investment objectives, financial situation and individual needs.