You may have neglected your savings, but if one of your resolutions is to create a pot for retirement, school fees or a rainy day, then now is a good time to start.
If you are young and feel like retirement is a long way off or if you have other priorities such as paying school fees and your home loan, you may feel that saving can be delayed. But, there is no such thing as starting too early as you might need your savings during emergencies. Savings are also important when planning for life-changing events, such as the birth of a baby.
With this in mind, the start of 2018 could be a good time to sort out your finances and put a savings plan in motion. Sonja du Toit, a financial planner for Sanlam, says the sooner you start saving, the better as you can benefit from compound interest. This is interest added onto the interest on your savings when your money starts to grow. “The effect of compound interest is so amazing that Albert Einstein referred to it as the ‘eighth wonder of the world’,” she says.
KEEPING THE COMMITMENT
If you can’t initially save a lot of money, there’s no reason why you can’t set aside small amounts that you can comfortably afford. “You can then increase it with 10% every six months. And, once you have an emergency fund, which should equal three to six months’ worth of money you use for your basic costs (rent or bond repayment and living costs), you can start on your long-term goals,” recommends Sonja.
This story is from the January 2018 edition of Bona.
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This story is from the January 2018 edition of Bona.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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