Let’s get crazy and save some moolah

By Leya Mall | 17 July 2019

#crazywaystosave is the South African Savings Institute’s theme for national savings month with a focus to engage the country’s youth. In line with this initiative let’s look at ways to save some of our precious moola, with the tips summarised from  “the tax-saving South African” columns that savetaxfree.co.za has published over the past year.

1. Save for retirement

The government offers a tax deduction of up to 27.5% a month of your taxable income for your retirement annuity (RA) contributions, capping the figure at R500,000 as of June this year. RAs are excellent tax-efficient long-term investment products and should form the cornerstone of your retirement planning.

2. Open a tax-free savings account (TFSA)

TFSAs were introduced in 2015 to promote a savings culture in SA. South Africans can save up to R33,000 a year in specially designated TFSAs with a lifetime limit of R500,000. The five types of TFSAs are grouped into: cash accounts; exchanged-traded funds (ETFs); unit trusts; life insurance policies; and linked investment service providers (Lisps). You can use TFSAs for goals-based investing; saving for your children’s education; buying that first car; saving to marry your sweetheart and many other sparkly things.

3. Pay off debts 

If you do sign up for a credit card, pay the amount due in full and on time each month to avoid being charged excessive interest. if you get seduced into signing up for two or more credit cards, never use one card’s debt facility to pay off the debt on another card. That’s a debt spiral you definitely want to avoid.

4. Plan for bonuses

Company bonuses are great if you are fortunate to receive one, but check that it doesn’t just move you into a higher tax bracket. Try to get information from your employer on that issue. At the very least, be prepared to be seriously shooketh at the amount of tax deducted from your bonus. Most importantly, use your bonus wisely: pay off debt and invest what you can.

5. Be smart with the car loan

If you can pay a larger lump-sum deposit for your new set of wheels, the less the monthly payment instalment will be. Most importantly, the larger your monthly instalment, the shorter the repayment period.

6. Pay your taxes and file your returns

Not really a savings tip but rather written in law so that you don’t become a fugitive, therefore “saving” you jail time.

7. Have a just-in-case fund

Some people call this an emergency fund, which is enough to give you a panic attack, so let’s make it a little less terrifying. The just-in-case fund is there should you need it for anything like a pipe bursting in your snazzy apartment or a major car repair. See it like an insurance fund, and when you get your salary every month put away a bit for the just-in-case fund.

8. Create and follow a monthly budget

Having a budget will help you determine how much you can spend every day without losing control. If you track how much you spend on small items – perhaps buying a cup of coffee regularly at work – you’ll be amazed at how much you could save, for example by bringing coffee from home.

If you want so more advice on these top savings methods, be sure to speak to a registered financial services provider. Remember: saving is short term in nature and investing is long term. So, with that in mind happy national savings month!