How to manage money at every life stage: tips from experts

FINANCIAL planning is a lifelong journey that shifts in focus with each stage of life, from childhood and schooling to early adulthood, midlife responsibilities, and then, retirement.

- NICOLA MAWSON

Hayley Parry, Money Coach and Facilitator at 1Life's Truth About Money, says it's vital to distinguish between saving and investing. “Saving is money that you plan on spending in the short to medium term,” she says, typically between three and five years. These savings might go toward a child's birthday, a December holiday, or a home deposit.

Investing, by contrast, is for goals that extend beyond five years and should aim to outpace inflation. Parry strongly recommends building an emergency fund before moving into investing. “Think of your emergency fund as a financial cushion or shock absorber between yourself and your bank account,” she says.

Start with R5 000 to cover small emergencies, then aim for a reserve that covers at least three months of household expenses, says Parry. Once this buffer is in place, longer-term investing can begin, she adds.

Tando Ngibe, senior manager at Budget Insurance, notes that savings should offer returns above inflation, be spread across different instruments, and be carefully checked for fees.

Kananelo Matela, junior investment consultant at 10X Investments, says that an emergency fund can be a priority ahead of retirement savings. “It’s okay to get that in place before taking on financial responsibilities for others,” he says.

Financial lessons start early