Page 163 - Wedding Essentials & Essential groom Issue 8

ave you heard the one about the guy who
prays to win the Lotto? The one where
he prays and prays and eventually God
H says, “Work with me...at least go out and
buy a ticket!” You cannot lie on the couch and “think”
yourself rich! Use these tried and tested practical
guidelines and you will vastly increase your odds of
financial success.

Debt Secret Research shows that your total housing
payments shouldn’t exceed 28% of your gross income.
Total debt payments should come in under 36%. alary Secret Save 10% of your salary; the
These guidelines include payments on all loans includ- earlier you start saving, the less you’ll need to
ing car finance, store and credit card debt. set aside every year to meet your goals. Allow
S your money more time to grow - the gains
RA Secret One of the key ingredients for long-term on your invested savings will build on the prior year’s
saving is keeping as much money shielded from taxes gains - the power of compounding. Saving at least 10%
as possible. A retirement annuity (RA) gives you that of your annual salary for retirement is recommended,
and more: you get an immediate tax break because but the older you start saving, the more you’ll need to
contributions come out of your pay cheque before save.
taxes are levied.
Rainy day Secret Keep three months’ worth of living
Share Secret Short term, the share market can be expenses in a bank savings account or a high-yield
extremely volatile, with potentially more frequent and money-market fund for emergencies. It’s a bit of a
severe drops than the bond market. For long-term hassle to build, but you’ll be grateful if you ever find
investment, your unit trust or endowment should be yourself jobless. Use annual bonuses, financial gifts
heavily weighted towards shares. The younger you are, from relatives and income tax refunds to build a cash
the more time you have to recover from share market cushion.
crashes. Gradually move your investments over to
bonds and cash as you get older. Good Life Secret Some people use the “rule of thumb”
method to calculate how much life assurance they
Eggs in a basket Secret Don’t compound the risk by need, rather get your financial advisor to do a Finan-
holding too much in any one share. Spread your shares cial Needs Analysis. With life assurance surviving
by investing in an endowment or unit trust. family members maintain the standard of living they
enjoyed prior to you or your spouse’s death.
Retirement egg Secret The single most effective thing
to do upon retirement, to ensure your capital will last, Life of excess Secret When you buy household insur-
is to start out with a lower income, then raise that ance, choose the highest excess you can afford. It’s the
amount annually to compensate for a cost-of-living or easiest way to lower your premium. File too often and
inflation increase. your premiums go up, rather shoulder small damages
out of pocket.

Credit Secret The best way to improve your credit
score is to pay bills on time and to borrow no more
than 30% of your available credit. It also helps to pay
off debt rather than moving it around because the ratio
of your credit card balance to your credit limit is vital.

Skadonk Secret The best way to save money on a car is
to buy a used car and drive it until it’s a skadonk! A car
loses 30% of its value in the first year.

So there you have it...some “secrets” and several prac-
tical tips to help make, save and keep your hard-earned
money and give you financial peace of mind.

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