MyMoney Online

3 questions you should ask before you save …

Picture: Supplied

You work hard for your money and you know that you should be saving more of it. Developing a determined attitude towards savings is the first step which will get you on the road to financial freedom. So how do you start?

Here are some essential questions that you should ask yourself:

How much should I save?

It depends on what you are saving for. It is also relative to how much you earn. As much as possible is the first answer. However, understanding that the cost of living gets tougher every year, it becomes more and more difficult to keep up with your savings. You need to start out by contracting with yourself to save a percentage every month without compromise. This amount should rather be a percentage of your income instead of an amount. This will keep you honest with your savings drive as you will be increasing your savings as your income increases. If you are living at home with the folks, then you should be saving a lot more than if you are living on your own. You should work out your actual cost of living, see how you can manage the expenses. Stay away from debt and leave behind as much as possible for savings. Get the cash account for emergencies in place first and then onto the investments for the longer term.

How long do I want to save for?

You should save all the time. Short term savings targets for things like deposits on cars, holidays.Long term savings for your retirement. Your time horizon determines how much you can afford to invest in more risky assets such as shares. You see, shares tend to outperform other assets over time. They do not perform in straight lines. They are volatile which means that their valuations can move up and down in a very short space of time. This volatility smooths out in the performance of shares over a longer time horizon. So, if you can invest for the long term, then shares become a more appropriate option. Generally speaking this should be a period of 10 years or longer.

Do I have cash for unforeseen expenses?

A sound financial plan has a provision for emergencies. This should be a cash savings account which is easily accessible and earns some interest. Ideally, a money market account with your local bank. The amount saved should cover you for 6 times your monthly income need. Why? Well, if you have need to access cash for an unforeseen expense then this account is available instead of you having to cash in your investments which are set for the longer term. It buys you peace of mind that even if you lose your job you have some time find a new one.


Read More
What you must learn from the Steinhoff and EOH share price collapses

What you must learn from the Steinhoff and EOH share price collapses

The Money Show’s Bruce Whitfield interviews Galileo Capital Personal Financial Advisor Warren Ingram.

3 JSE shares you should consider buying right now (by JM Busha Investment Group)

3 JSE shares you should consider buying right now (by JM Busha Investment Group)

The Money Show’s Bruce Whitfield interviews JM Busha Investment Group Managing Director Joseph Busha.

3 wealth creating shares to buy before yearend (by Anchor Capital)

3 wealth creating shares to buy before yearend (by Anchor Capital)

The Money Show’s Bruce Whitfield interviews Anchor Capital Fund Manager Tamzin Nel.

Are you missing out? Bitcoin (‘Zimbabwean dollar in reverse’) revisited…

Are you missing out? Bitcoin (‘Zimbabwean dollar in reverse’) revisited…

The Money Show’s Bruce Whitfield interviews Personal Financial Advisor Warren Ingram.

Convert petrol price savings into a 22% guaranteed return!!!

Convert petrol price savings into a 22% guaranteed return!!!

Financial Fitness coach Paul Roelofse says the recent drop in the oil price is an opportunity we should take full advantage of!

Why you need a pension fund (or retirement annuity) even if you own a house

Why you need a pension fund (or retirement annuity) even if you own a house

Many people falsely believe they do not have to save for retirement because they own the home they live in.

Popular articles
Dr Mbuyiseni Ndlozi opens up about his thesis

Dr Mbuyiseni Ndlozi opens up about his thesis

Ndlozi explains the significance of the the first chapter of his thesis: 'Trauma in the archives'.

German prosecutors probing Steinhoff CEO Markus Jooste (for accounting fraud)

German prosecutors probing Steinhoff CEO Markus Jooste (for accounting fraud)

The Money Show’s Bruce Whitfield interviews Steinhoff International Chairperson Christo Wiese.

Happy 50th birthday, Pick n Pay (congrats on growing your bottom line by 18%)!

Happy 50th birthday, Pick n Pay (congrats on growing your bottom line by 18%)!

50 years ago the retailer started out when Raymond Ackerman bought three tiny stores from Click founder Jack Goldin.

Is it normal to have a curved penis? Dr Shingai explains

Is it normal to have a curved penis? Dr Shingai explains

Urologist Dr Shingai Mutambirwa says penile curvature is only a concern if it impedes a man's ability to have penetrative sex.

Who is Advocate Tembeka Ngcukaitobi?

Who is Advocate Tembeka Ngcukaitobi?

The EFF lawyer stole the show during the state capture report court battle.

Meet Shoprite’s Christo Wiese, ruler of retail (and 3rd richest African)

Meet Shoprite’s Christo Wiese, ruler of retail (and 3rd richest African)

Bruce Whitfield interviews the remarkable Wiese (net worth R100 billion!) about how it all began and where it’s going.

3 easy questions could bag you R2000!

3 easy questions could bag you R2000!

WIN R2000! But only if you can prove you're a whiz of the MTN Biz Quiz by answering the following three questions...

Blesserfinder: Matching you with a sugar daddy near you

Blesserfinder: Matching you with a sugar daddy near you

Is social trend Blesserfinder, where girls are allegedly matching up with rich 'benefactors' in exchange for sex, a real thing?