New year. Clean slate. Fresh goals and all.
As we begin the year, we need to set the tone for how we want it to end.
Setting clear savings goals — whether it is to put money aside to pay a deposit for a house or car, and reviewing the goals as the months go by — is a recipe for success.
Nothing beats being honest with ourselves about our finances and seeking advice when we’re not sure of what to do or how to move past a setback.
This week, we look at how to start a savings plan and ensure that you stay on course. However, if you hit a snag, there is nothing wrong with reviewing and adjusting your targets.
Having said that, it is important to start and push ourselves really hard to achieve our goals.
Finishing the year with R6,000 in your savings account is better than nothing.
Onndwela Mudau, head of the life sales division at financial services company MamiGroup, says setting up a savings plan starts with identifying the savings goal.
“It is important to have a clear picture of what one is saving for, since it helps one with determining the timeline of the savings plan,” she says.
“Affordability is also another important aspect to consider.
“People need to save what they can afford. Consulting with financial institutions like insurance companies and banks helps because they have qualified financial advisers who can help with setting up the right savings plans.
“Once you know what you’re saving for, it is easy to decide by when you want to achieve it, how long it will take and how much you will need to save every month to achieve your goal.”
Mudau says one needs to consider if the savings plan is for a short- or long-term goal.
“For instance, for a short-term savings plan, one can take out a tax-free investment, and for a long-term goal, we have products such as endowment policies and retirement annuities.”
So, where is the best place to have your savings?
“Saving with a financial institution is the best option because of the interest one earns,” says Mudau.
Before you even start setting up a savings plan, you need to check if you can afford to save what you want to save every month.
— Onndwela Mudau
“Before you even start setting up a savings plan, you need to check if you can afford to save what you want to save every month. Doing a needs analysis before taking up a savings plan helps with that because it allows us to properly calculate how much one can save per month based on earnings and expenses. If a proper needs analysis is done, it becomes easy to stay on course,” says Mudau.
“One can review their savings goal annually to see if there are changes that need to be made; for example, one can check the growth on their savings plan to determine if one can increase the contribution to reach the intended goals.
“Monitoring the progress of your savings plan keeps you motivated and helps you identify problems before they derail your savings goals.”
