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How to achieve financial wellness in uncertain times

Posted By Marilynh / July 22, 2020 / 0 Comments

Financial wellness means different things
to different people.

For some it might mean owning a retirement home in a retirement village.  For others, it might mean travelling abroad or spending quality time with their children and grandchildren.

 

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We live in uncertain times and many South Africans are struggling to make ends meet. It is difficult to then see how you can get out of debt or live within your means and still be able to save for your retirement.

It takes 21 days to change a habit, however in uncertain times like right now, provides an opportunity to take a look at your financials and make a decision to start saving, even if it is a small amount.

“Old Mutual is a certain friend in uncertain times and has walked this journey with many customers over the past 175 years. We will help you as we helped many customers achieve financial wellness,” says Karabo Ramookho, strategic retail manager at Old Mutual.

Get a financial coach to help you ride out the storm of the rising cost of living:

Planning for your financial future can feel a bit like preparing for a sports event. The preparation will bring forth results, knowing that you have prepared well to achieve your goals. With the 2019 World Rugby Cup where the Springboks faced the English team in the finals, the importance of a good coach was illustrated in the win.

 

Tips for riding out the storm: 

 

  • Draw up a monthly budget and identify where you are spending your money.
  • Use Old Mutual’s budget tool to help you keep track. Click here to start.
  • Pay off your debt with the highest interest rates first.
  • Consolidate your debt into one loan with a lower interest rate.
  • Make adjustments to your spending habits. For example, prepare food at home instead of ordering takeaways. You will be surprised how much you will save.
  • The interest rates went down, but don’t reduce your monthly repayments. This will help you to pay off your debt faster.

Make optimal use of tax concessions on retirement annuity contributions and consider the tax refund as a means to reduce short-term debt, says Ramookho.

 

How to commit to saving:

 

A key to building personal wealth is to adopt the basic principles of saving money before you spend it. “Save first and spend later, rather than spend first and save later,” explains Ramookho.

Watch out for store-cards with introductory vouchers. The interest on such accounts is always expensive. Online shopping can also become addictive, because of the ease of buying. If you’re trying to get out of debt – or stay out – stay away from shopping for what you want, instead of what you really need.

“A basic step is to know how much you earn and what you spend it on. This already puts you in a better position than many fellow South Africans,” says Ramookho.

 

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Tips to save:

 

  • Arrange automatic deductions from your salary to commit to saving.
  • Set tangible goals for what you want to achieve.
  • Identify the biggest threats to building wealth (like a loan) and prioritise paying off debt.
  • Unleash the power of interest by saving every month and watch your money grow with compound interest where you earn interest on interest already earned.
  • Start an emergency fund by saving up to six month’s salary. An emergency fund will ensure that you do not have to go into debt when life happens.

Many South Africans retire and wish they saved more towards their retirement. It is wise to save as much as you can towards your retirement. If you belong to a pension fund, increase your contribution. You can also save toward a retirement annuity which is safe from creditors and you can deduct it from income tax. The money you get back from tax, can again be used to increase your retirement annuity.

 

Speak to your financial coach regarding your retirement plan
and steps to take to financial wellness


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Relevant articles:

Retire right with Old Mutual

Your retirement fund: Live large or play it safe?

 

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