South Africans do not save enough money, and those who are putting money away every month are simply not saving enough. Also, it’s recently been revealed that South Africans are the biggest borrowers in the world. Here are seven tips from GetMore on how to save and be better prepared for retirement.
1. START SAVING TODAY
What you should definitely not do, is only think about retirement when you’re in your 60s. It’s important that you start saving as early as possible, even if it’s just a small amount. The more money you save when you’re young, the better off you’ll be later in life. As soon as you start earning a salary, then you should start saving for your retirement.
2. HAVE A GOAL
Retirement is expensive, and working out how much money you need will depend on the type of lifestyle you want to have when you retire. Get help working out just how much money you will need, and how much you have to save, and then work towards those long-term investment goals.
3. PAY YOURSELF FIRST
Get into a good savings habit of paying money into your retirement fund before you pay for other expenses. Get this process automated so it’s the first thing to come off your salary. This way you won’t even have to think about it each month. Allocate money for saving before spending.
4. SAVE WHAT YOU CAN
Take a good look at your finances because there is always a way to cut back and save. Any amount is better than nothing, so start small and increase it slowly but regularly. The sooner you start saving, the more time your money has to grow.
5. SPENDING TOO MUCH
It can be tempting to spend money for the sake of appearances, but it’s important to understand the difference between something that’s “nice to have” and something that is necessary. Paying your rent is essential, but getting your hands on the latest cellphone is not. Create a budget so that you don’t spend more money than you earn.
6. ADJUST YOUR SAVING
South Africans who save are typically choosing the minimum amount to deposit, and any bonuses or salary increases are seen as spending money. If you get a bonus or your salary goes up, you need to look at your retirement contributions and increase the amount you’re paying.
7. CASHING IN
One of the biggest mistakes you can make is to withdraw your retirement savings when you change jobs or you’re retrenched. While it might seem like a good idea at the time, it’s bad for your savings plan. When you cash in you’ll be taxed on the withdrawal and you forfeit the long-term compound interest that you would have earned on that amount.
Many South Africans want to save for their retirement but they don’t know how to do this or what products to choose. It’s up to you to take responsibility for your own future and to learn more about retirement investing.
Luckily for GetMore members you can get professional, confidential and free advice from our money experts. Call us today on 084 11 438 48 and get the right financial advice to suit your budget, lifestyle and needs.