Fine tune your finances

23 April 2014

If you’ve made some bad money decisions in 2013, then make the decision now to not repeat those same mistakes this year. It may already be the end of April, but it’s never too late to reflect on and improve your financial situation.

Thandi Ngwane head of strategic markets of Allan Gray has some advice on how you can fine tune your finances and ensure your financial future. Take these five steps on board and you could see your money grow:

1. Look at your spending versus your saving:

You may be surprised by how much you are spending. Keep a running total of where your money is going in any given month. You may find you are spending too much on things you don’t need.

“Small financial sacrifices today can have a very big impact on your peace of mind and of course on your future wealth, and good habits are easier to stick to than you may think,” says Ngwane.

2. Take a reality check:

“Did you know that it costs more to have a monthly DSTV subscription than most minimum monthly contributions towards a retirement annuity or a unit trust investment? Many financial services companies offer investment minimums of R500 per month, and the sooner you begin putting money aside, the more time will help your money grow through the power of compounding,” points out Ngwane.3.

3. Don’t just spend your bonus:

“If you do receive a bonus, the best tip is to stop and think ahead before you spend it. Bonuses are a savings windfall – they give you a chance to take a big step ahead in your financial plan,” says Ngwane.

4. Invest for future opportunities or unexpected events:

“Building up an investment is important as it gives you options and buffers you against unforeseen elements. If you spend your bonus you forgo this opportunity,” says Ngwane.

5. Finally, don’t forget about your retirement:

“Another wise way to spend a portion of your bonus is by opening a retirement fund investment. To retire comfortably requires planning, discipline and time for your plan to be effective. The government encourages saving for retirement by offering tax incentives if you invest in a registered retirement fund, such as a retirement annuity.

Starting early, and making additional contributions when you can afford to, not only increases the amount that can be contributed, it also increases the effect that growth can have on these contributions,” adds Ngwane.

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