PSG answers your financial, budgeting, and insurance questions.
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I’ve recently received a promotion and salary increase, but my expenses seem to rise just as quickly. What should my top financial priorities be to ensure I use this increase to build long-term wealth rather than simply upgrading my lifestyle? Bianca van Niekerk, Wealth Adviser, PSG Wealth, Vanderbijlpark Financial Planning.
Congratulations on the promotion! Unfortunately, it's very common for a salary increase to lead to a higher standard of living. Before you know it, people start spending their entire income without realising how they managed before the increase. The fact that you're asking this question means your head is already in the right place. I'm not sure what financial products you already have in place, but I'm going to assume you have a pension or provident fund through work.
Always start with an emergency fund. This should have enough liquid capital readily available for unexpected circumstances. It will ensure that you don't have to rely on your credit card to get through short-term situations, such as a burst tyre or needing to replace a washing machine.
Once that's sorted, start making a monthly contribution towards a savings product, such as a Tax-Free Investment Plan (TFIP). You can start with R500 per month, and you're allowed to contribute up to R46 000 per tax year. Make this debit order part of your monthly expenses so that it happens automatically.
Ensure that your tax-free investment is structured for long-term wealth creation by diversifying across different asset classes. The best part is that all your interest, dividends and capital gains remain tax-free, provided you stay within the annual contribution limit. Keep in mind that this investment is not fixed, so you can access your money if you ever need to. However, I would advise you to be very careful when doing so, as you are not allowed to offset withdrawals against your contribution limits.
As your income increases, increase this debit order automatically. Once you've reached the maximum annual contribution, branch out into other investment vehicles, such as unit trusts or endowments.
Remember, there's nothing wrong with enjoying a few small spoils along the way – just make saving a habit first.
I often hear investors who have been in the market for years now say they wish they had made different financial choices when they were younger. As a 24-year-old starting my financial journey, what steps can I take now to make a difference in my later years? Annalise De Meillon-Muller, Senior Legal Specialist: Advice, PSG Wealth
Firstly, it’s great to hear that you want to start your journey to financial wellness. Procrastination and simply reacting to your own blind spots are common mistakes investors can make at the beginning of their financial journey.
People tend to run on autopilot and make financial decisions without pausing to consider its impact. To avoid that from happening to you, start saving, investing and growing your wealth sooner rather than later so you won’t need to ask yourself: “Why didn’t I just start somewhere?” later in life. In addition, don’t increase long-term risk for immediate satisfaction.
By taking control of your finances one step at a time, you will eventually grow confident in your financial decision-making which will help you not to fall into your own mindset traps. Always remember, it’s not about how much you start with. It’s about how early you start and how consistent you remain. Your pocket and bank account might feel some pressure if you start today but will probably be smiling in the future.
You don’t need to do it alone either – speak to a qualified financial adviser, who will help you take control of your financial future.
I try to stick to a monthly budget, but I still find myself overspending. With living costs continuing to rise, it's becoming harder to stretch my income to month-end. What are some practical ways to review my budget and identify where I can cut back and save? Gerhard Mare, Wealth Adviser, PSG Wealth, Polokwane Ismini Park
I will assume that you are already doing basic budgeting by cutting on unnecessary costs and setting hard limits on leisure-expenses. After this, one of the handiest budgeting methods is using a credit card.
A credit card is usually blamed for overspending, and fair enough, it is if you treat the limit as extra income. Used carefully, though, it can be a useful budgeting tool, especially when living costs jump around from month to month.
Most cards give you an interest-free window after you spend - often around 45 to 55 days, depending on the bank and when in the cycle the purchase falls. In practice that means you can buy now and settle the full balance later, without interest, as long as you pay the statement in full by the due date every single month.
This helps when the cost of living fluctuates; fuel, groceries and other expenses that land awkwardly near month-end. Those rarely cost the same every month. With a credit card, you’re not forced to squeeze every rand into a single calendar month if one week is heavy and the next is lighter. Over roughly two months you can smooth the bumps - budget for something closer to the average of the two, rather than panicking when one month runs hot - provided the full amount is cleared when it’s due.
Keep in mind that you are using the credit card as a timing tool - not a loan. Track every charge against your real budget. Don’t spend more than you can repay from the next pay cycle. Keep a separate record so “interest free” never becomes “I’ll sort it out later.”
Rising costs make strict monthly envelopes feel tight. A credit card, paid in full every month, can give a bit of breathing room across the cycle.
I am planning to start my own small business and want to better understand what insurance I might need. What business risks should I take into consideration? Ryno de Kock, Head of Distribution at PSG Insure
Starting a small business often means focusing on growth, customers, cash flow and day-to-day operations so insurance can sometimes feel like something to address later.
However, building appropriate cover into your plans from the outset can help protect the work you are putting into the business and give you a stronger foundation to manage unexpected setbacks. This is especially important in South Africa, where an estimated 385 000 new companies were registered last year, yet up to 80% of businesses fail within five years. While finance, market conditions and operational pressures all play a role, inadequate risk protection is an important area for business owners to understand. Fewer than one in five South African SMEs have formal business insurance, which can leave them exposed to disruptions that affect operations, cash flow, and long-term sustainability.
The key areas you will need to consider include asset loss or damage, business interruption, liability, cyber and data risks and internal or people-related exposures.
Commercial property insurance can protect against fire, theft and natural disasters, while business interruption cover can support lost income and extra expenses if trading is disrupted. Liability cover is also important, as third-party claims linked to injury, property damage or alleged negligence can have serious financial and reputational consequences. Depending on the business, this may include public liability and professional indemnity cover.
Cyber risk should not be ignored. As more businesses use digital platforms, cyber insurance can help protect against data breaches, ransomware and fraud. Regular software updates, multi-factor authentication and employee awareness training can also reduce exposure. Businesses should also consider people-related risks, including internal fraud through fidelity cover and professional liability cover for those providing advice or specialised services.
A practical starting point is to speak to a qualified insurance adviser who can help identify possible gaps, explain policy terms and structure cover around the specific risks your business faces. Insurance should also work alongside everyday risk-management measures, such as security systems, internal controls and contingency plans so that your business is better prepared to absorb unexpected shocks and continue operating where possible.
PERSONAL FINANCE