Being smart with your money is a lifestyle choice. Taxi Focus spoke to Wayne Spries, a financial consultant from SWI Financial Consultants to find out how smart money choices can lead to a happy life.
One should rather try and differentiate between bad debt and “good reasons to make debt”. The key differentiator would be that “good reasons to make debt” is to make debt to acquire an asset and bad debt is to make debt to acquire things that are consumed and short-term in nature.
A personal budget is necessary to ensure that you compare the income you receive versus the money you spend. The challenge would be to ensure that you do not spend more than you earn and part of your budget you allocate an amount to savings each.
This is a simple one, as soon as possible, even if you start with a small amount.
The main difference is the flexibility of the pay out at retirement date. Even though the intention of both these funds are the same i.e. to save for retirement and when you require you reinvest your retirement benefit so that you can earn a monthly income from the amount invested. The Provident Fund allows you to receive your full retirement payout as a lump sum whereas with a Pension Fund you are only allowed to take one-third of the retirement pay out as a lump sum and the other thirds has to be reinvested so that you can earn a monthly income from the amount invested. Currently, if you retire from a Pension Fund and the value of your retirement benefit is less than R247 500 then (similar to a Provident Fund) you will be allowed to receive your full retirement payout as a lump sum.
No, membership to an occupational retirement fund is a condition of employment and therefore while employed you cannot withdraw from the Fund. There would have to be a change in your employment contract and conditions of employment.
This will depend on the individual’s circumstances taking into account their investment goals, their current investment portfolio and the person’s circumstances into account. Perhaps I can mention that as a general guideline I would say that if people are considering investing in shares, a starting point would be to invest in unit trust. People often think they the same but they are not actually.
Most definitely, life cover like any other cover is a solution used to mitigate risk. Once again, this will depend on the individual’s circumstances taking into account their current financial position, their business interest, composition of household income, household debt, number of financial dependents etc. into account. What I do suggest is to not invest in life cover for the sake of it or at some random amount, but to rather implement the life cover as part of a structured financial plan.
You will be causing a huge problem for your family and intended beneficiaries. If you die and do not have a Will, South African law will determine who gets your assets according to Intestate Law of Succession and a judge may decide who will raise your children. Your Estate may then also attract exorbitant legal fees. If no Will and estate plan is put in place, your hard-earned assets may end up in the wrong hands and may even be sold to cover expenses of which your family will have no control of.
Financial planning around divorce actually starts before one gets married; couples who wish to get married need to understand the different marriage regimes i.e. Community of Property (COP), Out of community of property (ANC) without accrual and Out of community of property (ANC) with accrual. To limit financial pain of divorce, I would recommend couples understand these marital regimes, get out of debt as early as possible and think carefully when disposing of immovable assets.
Get out of debt as soon as possible
Have a documented budget and live within your means.
Consult a Certified Financial Planner.
SWI Financial Consultants (Pty) Ltd are Employee Benefit Specialists, with a strong focus on client relationships and employee wellness. They specialize in Provident Fund, Pension Fund, Groups Risk Benefit Schemes, Retirement Annuities and Structural Savings Plans. For more info call 021 532 1229.