Adding value to your money
Essentially, money comes from two sources of income:
Work (salary) and investments. We work for our money and we can put our money to work.
Investment is employing money to work for you, but in order to do that you must save so you can invest safely.
Saving in general is important so you don’t lose resources, acquire assets and have more income.
If you don’t save and invest, you may end up depending on only one source of income (your salary), which leaves you in a precarious position.
If you don’t save and invest, you may end up depending on only one source of income (your salary), which leaves you in a precarious position.
In addition — as you get older — with no assets or investment, you may struggle to adjust to living on a reduced income.
Pensions are typically only 70 per cent of your last income, so for people retiring without any additional savings/investments, retiring may have a significant effect on their standard of life.
“Nowadays, people are spending so much money and they’re also pushed to keep spending more on many different brands, and when someone keeps doing this it will cost them later on.
How to be smart with borrowings
1. Resist the temptation: Borrowing is something that can be extremely tempting. However, before borrowing and to ensure you borrow with good reason, always ask yourself the following questions:
Do I really need to borrow and how will it affect my life in the long term? For example, if you take a two-year loan to refurbish the house, how will you feel in one-and-a-half-year’s time when you are still paying off the loan? Make sure you can answer, ‘Yes, it will still be worth it at the time’ with confidence.
2. Are you borrowing for a short-term want (for example, a personal loan for a vacation) or a long-term need (a student loan, a mortgage for a new house)? If it’s a short-term want, consider saving in advance or looking for a more affordable option.
If its a long-term need, take your time with the decision. Think carefully about how it will affect your life and do not make rash decisions.
3. Do you already owe money and are you in control of your existing payments? Aim not to borrow more than 30 per cent of your yearly net income.
4. How will borrowing affect your budget and current expenses? Be sure you can afford the payments now and in the future and can still live comfortably, save and prepare for emergencies.
5. What are the charges and fees at different banks? Did you shop around for rates? What are the consequences if you do not make your payments? Make sure to read all terms and conditions at the bank before agreeing to sign the contract.
2. Are you borrowing for a short-term want (for example, a personal loan for a vacation) or a long-term need (a student loan, a mortgage for a new house)? If it’s a short-term want, consider saving in advance or looking for a more affordable option.
If its a long-term need, take your time with the decision. Think carefully about how it will affect your life and do not make rash decisions.
3. Do you already owe money and are you in control of your existing payments? Aim not to borrow more than 30 per cent of your yearly net income.
4. How will borrowing affect your budget and current expenses? Be sure you can afford the payments now and in the future and can still live comfortably, save and prepare for emergencies.
5. What are the charges and fees at different banks? Did you shop around for rates? What are the consequences if you do not make your payments? Make sure to read all terms and conditions at the bank before agreeing to sign the contract.
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