Essential tips for saving and investing wisely

July is National Savings Month, and there’s no better time to take a closer look at your finances. But here’s the catch: saving (and investing) isn’t one-size-fits-all. The key to successful saving and investing lies in understanding your personal context. 

Everyone’s financial journey is unique. Your needs, dreams, and goals are different from anyone else’s, and that’s why financial advice should be tailored to your specific situation. 

Financial planning must be personal. Whether you’re saving for a rainy day, a new car,  your child’s education, or your retirement, your plan should reflect your life stage and priorities. 

For example, saving for retirement is one of the most critical long-term goals. Yet, many  South Africans struggle to retire comfortably. Without proper planning, people may face tough choices like moving in with family or cutting essential expenses like medical aid. 

Start small, start now 

The good news? It’s never too late or too early to start saving.  

Here are some practical tips to kickstart your savings journey: 

• Assess your expenses: Go through your bank statements. You might find forgotten debit orders or subscriptions you no longer use. Or see expenses that you can cut down on. 

• Create a budget: With the help of a financial adviser, draft a realistic budget. This helps you identify wasteful spending like frequent takeaways or impulse shopping and redirect that money toward your goals. 

• Shop smart: Plan your grocery trips and stick to a list. Using delivery apps can help avoid impulse buys. Weekly shopping is often more cost-effective than daily dashes to the store. 

• Maximise rewards: Loyalty and rewards programmes can stretch your rands further. Understand how they work and adjust your behaviour to get the most value from them. 

Tax-free and smart investment options 

Whether you’re 18 or 80, a good place to start to help you build a secure financial future is to include tax-free investment accounts and retirement annuities in your financial plan.

• Tax-free investment accounts: You can invest up to R36 000 per year (R500 000  over your lifetime) and enjoy tax-free growth. And thanks to compound interest, which is often called the “eighth wonder of the world,” your money grows faster over time. 

• Retirement annuities: This is another tax-efficient way to save. You can claim back up to 27.5% of your contributions (up to R350 000 annually) against tax, and your investment grows tax-free. 

When life changes, so should your financial plan 

Life is full of transitions, including starting your first job, getting married, having children,  getting divorced, making career changes, and eventually retirement. Each of these milestones can significantly impact your financial needs. That’s why it’s essential to revisit your financial plan regularly with a trusted and accredited financial adviser. 

Financial advisers also play a crucial role in helping clients stay calm during market fluctuations. It’s easy to panic when markets dip. But making emotional decisions like selling investments too soon or changing funds because of short-term market noise can lead to real losses. Advisers help clients stay the course and make informed choices. 

Your journey starts here 

We encourage people to take control of their financial future by speaking to a qualified financial adviser. Whether you’re just starting out or planning for retirement, the right advice tailored to your context can make all the difference.

* Friedrich is the chief marketing officer of Momentum Investments.

PERSONAL FINANCE