SIMPLE WAYS TO SAVE AND INVEST ON A SMALL BUDGET

Spring is finally here! At this time of year, many of us will adopt some fresh lifestyle habits as the warmer weather lifts our mood and brings with it some renewed energy and enthusiasm. It’s also the perfect time to review your savings and investments, and possibly ‘spring clean’ your financial planning or savings strategy.

The first step is to see where you can free up some extra money. The fastest way to save and liberate cash is to kill debt and stop paying interest. This provides more money to put aside for saving or for necessary expenses. How can you find a few extra Rands to invest in your future?

Choose one bill each month, for example your cell phone contract, car insurance or bank charges, and spend a few hours on the phone or online making sure it is as cost-effective as possible. Don’t be afraid to ask for a better deal from your service provider. And if they offer special discounts or reduced rates for things like movie tickets or restaurant outings, make the most of these tools.

You could also consider cutting out or replacing a small luxury, such as making a flask of coffee and a healthy snack for work, rather than buying these things. Similarly, you could cancel your gym contract and take up running or swimming instead.

The next step is deciding what to do with your newfound money. If you are allowed to make additional contributions to your retirement fund, this is often the easiest and most cost-effective of your options.

One of the great advantages of this is that you receive a 27,5% (of the higher of your remuneration or taxable income) tax deduction for the total of all your retirement fund contributions, limited to R350 000 per year. Any amount over R350 000 can be rolled over to the following year.

Another great savings vehicle that is also tax efficient is a tax-free savings account. You can speak to your bank or other financial service provider if you’d like to open one of these accounts. You may contribute up to R36 000 in a tax year and R500 000 in your lifetime, without paying tax on the interest earned.