Each of us has unique goals in life. How you see your journey to success is not how the next person sees it, and sometimes life or family challenges make decisions for you. With savings, you can be ready for life’s pleasant and unpleasant surprises.
A man or a woman with a plan is always a step ahead.
To make it easier, you can divide your goals into short-term and long-term ones. Short-term goals are those you want to achieve in a year or so, such as an emergency fund or for a holiday. Long-term goals often include things like retirement or buying a home. Education needs may fall somewhere in between. It’s always great to reconsider your savings goals when you get a new job.
With savings, you can be ready for life’s pleasant and unpleasant surprises.
What common financial goals require saving and investing in South Africa?
Chances are, you will have to save and invest for some or most of these things some or other time or all the time:
- Your own home
- Your retirement
- A wedding or a funeral
- A baby or babies
- Education
- Unplanned medical expenses
Tips for saving and investing in your 20s and 30s
Good financial habits in your 20s and 30s create a solid foundation for lifelong security. Here’s how to make the most of each stage:
In your 20s
If you learn great money habits from the start, they will stand you in good stead for life. Your future lies ahead of you and now is the time for laying the correct foundations. The first lesson is an emergency fund, as that protects your other goals from falling by the wayside. You never want to cash in on retirement money to replace a tire – you’re losing too much. Debt is the same trap – you will quickly learn what good or bad debt is, and how it can work for you. If you can afford a hospital plan or medical aid, that will help a lot, too.
Yes, you are young enough to start saving for retirement. Because the earlier you start, the less you have to save later – and there is never a better time later. A small commitment now will put you strides ahead of others.
In your 30s
Hopefully by now, you are earning a bit more, but you also have greater commitments. Your family may be growing, and you may want to invest in a home. To save for a deposit beforehand has great advantages.
To start savings towards education as soon as a child is born is a great decision to make.
To increase your retirement contributions is another bright idea – your money can grow faster in a retirement fund than anywhere else because of the tax breaks and tax-free growth.
Tips for saving and investing in your 40s and beyond
How you save for retirement needs to adapt as you approach retirement, while also considering other crucial factors.
In your 40s
Right, maybe that salary check is starting to look like something. But the upkeep of a home is a never-ending story, and kids’ education is not cheap. Planning for education may be even more important than earlier. And have you been able to keep up the retirement discipline? If not, now is a great time to top up and not be sorry later. And your parents, will they be sorted, or do you have to look at their well-being, too?
In your 50s and later
You are now in the last stretch before retirement and will want to make sure that your take-home income will be sufficient. Leaving a legacy becomes even more crucial to ensure your loved ones inherit the savings and assets you’ve worked hard to build. Are you on course or do you need to top up as often as you can? Don’t forget to plan for medical expenses at retirement as medical inflation is much higher than normal inflation, and your claims will not become less during your retirement.
Are you prepared for all the expenses that may come your way? And your parents? And your kids? The sandwich generation …
To sum it up
Again, your situation may be unique. A new career at 35, a new dad at 50 or getting married at 60? Life is unpredictable. That’s why savings can help you along during every life stage – it’s your crutch for life’s challenges as well as joys.
Article credit: https://www.momentum.co.za/momentum/personal/blog/essential-savings-tips-for-every-life-stage