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Losing Touch With Our Money

Losing Touch With Our Money

As the world gets faster and technology improves: we are losing touch with our money. What can we do to take our financial power back?

The human mind is one of the most complex and powerful things this world has ever known. When nurtured and cared for it can produce remarkable ideas that can be harnessed to make the world better. It can also be manipulated and twisted to serve a purpose. Companies have learnt how to use our thoughts and impulses against us. To a point where being a consumer in the 21st century is a tremendous challenge: a minefield of tricks and distractions.

Companies have designed their marketing to use our behavioural biases and emotional biases against us. As human beings, we only have a finite amount of willpower. When we wake up in the morning and start making decisions, this willpower starts depleting. After a long day at the office, our willpower supply is completely depleted. This is when they pounce.
The most basic tactic is temptation alley at the supermarket where they surround us with sweets, snacks and cold drinks. The next time you are standing in the cue at the shops after work have a look at the people around you. Many of them have started to drink something from the shop or are eating something from the bakery because they are hungry or have snaffled a few chocolates for later. This is no coincidence. When we are hungry and tired (no more willpower) our decision-making ability is impaired (as discussed in Thinking Fast and Slow by Daniel Kahneman). Companies understand this and shops are designed to use our lack of willpower against us and to tempt us to spend more. On the topic of companies wanting us to spend more: the banks are taking it to a whole new level.

Whenever we use a bank card to make a purchase we are effectively disconnected from our money. Yes, we get a message from the bank saying how much we have spent and how much is left in our account, but when we look at the amount that has come off, it doesn’t seem that bad, and looking at the balance always makes it seem like we have plenty of money left. Banks encourage us to use virtual money for just this reason. They want us to lose touch with how much we are spending. Further to this they incentivise us by giving us purchase rewards points so that we spend more and more using our cards (and not cash) and are “rewarded” for it. When we have spent all our money they offer us personal loans and credit cards so that we spend even more. Then, once we have accumulated all this terrible debt and we want to purchase a home using a mortgage bond they give us ridiculously high interest rates because they see us as a risk. It’s a never-ending debt spiral and if we are not careful, and do not use debt responsibly, we can land up in a massive debt hole.

Banks have now started issuing bank cards that have a tap system built into them. Below a specific limit we merely must hold our card above the card machine and *beep*, our purchase is done. No pin code required. No time to think twice. It is instantaneous and evil. Online shops encourage us to preload our credit card details to make impulse buying that much easier. Amazon has a Buy-with-one-click feature. There is a button on the right-hand side of the page. *Click* and your purchase is done. No pin codes. No prompts (are you sure?). No second thoughts.

Nobel Prize winner Daniel Kahneman in his book “Thinking Fast and Slow” describes the brain as having two systems: The Fast system and the Slow system. The Fast system is the first system the brain uses (The first line of defense). As the name suggests: it is quick, impulsive and emotional. Kahneman describes our brain as lazy, relying principally on the Fast system to make decisions. The Slow system is the deep thinking and more rational of the two. It is only activated (Woken up) after some time, however. The Fast system is not all bad. It is the system that will react in a split second, causing us to pull the steering wheel of the car hard left thereby saving us from a potential car crash. However, it is also the system that will cause us to react in a split second, whip out the credit card or Buy-with-one-click: causing a financial car crash.

The solution to this is that we need to get in touch with our money again. To get in touch with your money, break up your spending into monthly expenses and weekly expenses. For the weekly expenses, draw the money in cash and ration it for each item. For example: R2 000 total, R500 for petrol, R1 200 for groceries, R300 for dinner etc. Do this only on the day when you normally go shopping. You do not want to sit with a pile of cash burning a hole in your pocket. If we’re not careful, we’ll find something else to spend it on and companies will try to take it from us.
The One Rand Man that was sponsored by Sanlam was a fantastic example of this. The participant had lost touch with his financial affairs because of constantly using cards and automatic debit orders going off his account. In a drastic turn of events he was paid his entire salary in one rand coins and had to ration them to get through the month. It was only then, with the physical money in front of him that he truly realised and appreciated how much he had been spending in various areas of his life. He did not have credit cards to lean back on. He had to make it through the month with his stash of one rand coins. Whilst I wouldn’t go as far as to break up all my monthly spending into one rand coins, I think there is value in physically quantifying what you are going to spend and rationing it.

If the physical cash route is not for you then there are many apps that will help you to track your spending. A tool such as 22seven.com will allow you to take a step back and see where you are spending your money. You can link many of your bank accounts, investments and credit accounts to this app to give yourself a bird’s eye view of your financial affairs at the click of a button.

With the world looking to rush us into decisions and trying to force us to act emotionally and impulsively, the best solution may to be slow things down. If it is truly not a life or death decision, sleep on it before making it. Give yourself a few days to consider something before acting on it. By taking things slowly, in a fast-paced world, you can take some of your power back from those who are trying to steal it.

Trying to take a different perspective on a financial decision may be a way of short circuiting impulsivity, emotion and bias. There are two good ways of doing this. The first is to pretend you are giving advice to a friend. What would you tell them to do if they were faced with the same set of circumstances you are now facing? Say it out loud. You would be surprised how much what you are about to do and what you would tell your friend to do will differ. Be true to yourself and follow the advice you would give to your friend. The second way to do this is to seek out the advice of an independent neutral party, ideally someone who can give you their differing perspective. At the very least it will lead you to think more deeply about the decision you are about to make.

Avoiding decision fatigue is the best way to go. Deciding on an empty stomach or when you are tired can lead to disaster. Monitoring yourself before making decisions could lead to much better decisions, that are made for the right reasons not just because you are hungry or tired.

Remembering a list of new things to consider can be a burden. Perhaps a better way to do this is to create a decision matrix that asks you good questions in deciding. Some examples of these questions could be:

  1.  Is this purchase something I need or is it something I want?
  2.  How important is it that I buy this right now? Is this a matter of life or death?
  3.  Do I really have the money for this?
  4.  Can this decision wait till tomorrow?
  5.  Are they trying to rush me into this?
  6.  How am I feeling right now? Am I tired? Am I Hungry?

 
As Kahneman proved through his Nobel Prize Winning studies: we human beings can be irrational, emotional and impulsive when it comes to our decision making. It is through understanding this and understanding that the business world is trying to use this to their, and not our, advantage, that we can take a step towards making better decisions in the future. In this fast world, we should never be afraid of driving in the slow lane: it may help prevent us getting into a financial car crash.

A quick summary of how to take your financial power back:

  • Use Physical cash whenever you can and ration it. Don’t keep it too long, however.
  • If the cash idea doesn’t work for you, an app like 22seven will help.
  • Sleep on it: Take your time, they are trying to rush you and play on your impulses, biases and emotions. Don’t let them.
  • Give someone else advice about it (get perspective).
  • Never make decisions when you are tired or hungry.
  • Partner with a neutral, experienced third party (CERTIFIED FINANCIAL PLANNER®) to help you strip the impulse and emotion out of your decision making.

Ask yourself good questions when deciding:

  1.  Is this purchase something I need or is it something I want?
  2.  How important is it that I buy this right now? Is this a matter of life or death?
  3.  Do I really have the money for this?
  4.  Can this decision wait till tomorrow?
  5.  Are they trying to rush me into this?
  6.  How am I feeling right now? Am I tired? Am I Hungry?
SKOKKENDE koste mag dalk aan jou belegging vreet

SKOKKENDE koste mag dalk aan jou belegging vreet

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Goeiedag!

Theo Vorster gesels op ‘n gereelde basis in die media, veral NETWERK 24, oor beleggings en so meer. Die onderstaande artikel het baie aftrek gekry en ons deel dit graag met u.

Die vrae wat u uself moet afvra is:

  • Hoeveel betaal ek?
  • Weet ek wat die totale koste is, alle lae ingesluit?

Laat weet ons indien u onseker is oor u koste struktuur. Geniet die lees.

Die Sake en Sauvignon-slypskole by die Vryfees in Bloemfontein was ’n besondere geleentheid – Media24 het ’n wenner met hul Feeskafee-konsep, waar al die koerante, TV-kanale (kykNET en Via) en tydskrifte onder een dak is!

’n Ietwat bitter nasmaak, was die gesprekke met mense oor die koste wat hulle op beleggings en vir beleggingsadvies betaal. Ek vind dit amper misdadig as ’n oom en tannie jou vertel dat ’n adviseur hulle ’n aanvangsfooi van tussen 3% en 5% op hul beleggings kwoteer – op ’n neseier van R5 miljoen kom dit neer op ’n aanvangsfooi tussen R150000 en R250000 wat na die neseier van die adviseur gaan (en dít nogal by ’n welbekende instelling) in plaas van na die belegging!

Daar is oorgenoeg bewyse dat mense wat van finansiële adviseurs gebruik maak, aansienlik beter daaraan toe is as mense wat nié van finansiële advies gebruik maak nie.

Die vraag is: Wat is ’n regverdige prys om vir die diens te betaal?

Voordat ons by die koste van advies kom, die jongste studie (Julie 2017) oor die waarde van finansiële advies kom van die Internationale Longevity Centre in Brittanje (ILC-UK). Wat die studie soveel meer waarde gee, is dat die ILC-UK onafhanklik is en nie verbind is tot enige finansiële instelling nie, maar eerder fokus op navorsing op die implikasies dat mense vandag baie langer gaan lewe as ooit tevore.

In dié studie is daar na werklike data van meer as 90000 huishoudings in Engeland gekyk. Die slotsom was dat mense wat van finansiële adviseurs gebruik maak, beter daaraan toe is as mense wat nie adviseurs gebruik nie, ongeag hoe welvarend hulle is.

“Armer” mense, oftewel mense wat op ’n streng begroting moet oorleef, was om die waarheid te sê 21% beter daaraan toe. Die welvarendste groep mense was 16% beter daaraan toe. Dis vergeleke met mense wat nie finansiële advies gebruik het nie. Die studie het gehandel oor ’n tydperk van 10 tot 15 jaar. Soos verwag, het die voordeel van advies met tydsverloop en ouderdom toegeneem.

Die vraag is nou: Indien finansiële advies so ’n groot bydrae lewer tot jou finansiële welvaart, wat is ’n billike kostestruktuur vir goeie advies?

Om die vraag behoorlik te antwoord, is dit belangrik om die verskillende koste uit mekaar te hou aangesien appels nie altyd met appels vergelyk word nie – die punte hieronder is op die grondslag dat die adviseur uiteindelik vir die finansiële ontleding, beplanning en inwerkingstelling verantwoordelik gaan wees, tesame met die deurlopende bestuur en monitor van die portefeulje:

  1. Geld wat van die belegging afgetrek word alvorens jou geld belê word (dit word gewoonlik strukturering-, inwerkingstelling- of beplanningsgeld genoem): Die vertrekpunt hier is dat daar gewoonlik heelwat werk gedoen moet word alvorens ’n volledige plan, met ontledings, langtermyn- finansiële modelle en ’n beleggingsaanbeveling, aan die kliënt gedoen kan word. Die vertrekpunt is dat die koste aan tyd en kundigheid gekoppel behoort te word. As ’n riglyn behoort dit iewers tussen R7500 en R25000 (indien werklik gekompliseerd) te wees indien die belegger wel die belegging uiteindelik by die adviseur plaas. In die R5 miljoen-geval hierbo behoort die beplanningskoste nie meer as so R7500 te wees nie!

  2. Fooi vir die bestuur van die onderliggende beleggingsportefeulje: As vertrekpunt moet die totale deurlopende fooi nie meer as 3% van die waarde van die bates per jaar beloop nie. Afhangende van die struktuur van die belegging (aktief vs. passief of binnelands vs. buitelands) kan die 3% per jaar heelwat verlaag word. Om die totale deurlopende fooie te verstaan, moet drie elemente uitmekaar gehou word en afsonderlik verstaan word – hoewel dit uiteindelik bymekaar getel moet word om die totale deurlopende fooi te bereken:

    Adviesfooi – sowat 1% van die bates onder bestuur; dit kan verlaag word indien die bedrag relatief hoog is en/of die kliënte nie veel deurlopende insette van die adviseur verlang nie. Dit is ook altyd raadsaam om te onderhandel oor ’n maksimum fooi per maand indien dit gaan oor ’n groot bedrag.
    Platform- en administrasiefooi – vlakke van tussen 0,5% en 0,75% van die bates onder bestuur is redelik standaard in die effektetrustfonds- en beleggingsbedryf.
    Onderliggende fondsbestuursfooie – dié fooi kan wissel van 0,5% tot 2% van die bates onder bestuur afhangende van die spesifieke mandaat aan die fondsbestuurder.

Wees dan ook versigtig vir prestasiegelde, “fonds-van-fonds”gelde, transaksionele koste en wrapper-gelde wat in sekere gevalle bygetel kan word!

Daar is alternatiewe tot so ’n fooistruktuur, veral waar die belegger slegs ’n spesifieke diens of kundigheid wil bekom. Hier verwys ek spesifiek na tegniese boedelbeplanning, batetoewysing- en/of portefeuljemoduleringsdienste. In dié gevalle gaan die adviseur ’n fooi hef vir die spesifieke diens en sal dan nie verantwoordelik wees (of geld verdien) vir die langtermynprestasie van die portefeulje nie.

Theo is uitvoerende hoof van Galileo Capital en ’n direkteur van Verso Wealth: Hy is ook ‘n spreker oor politiek-ekonomiese aangeleenthede en beleggings.

BONITAS ANNOUNCES LOWEST INCREASE IN 6 YEARS

BONITAS ANNOUNCES LOWEST INCREASE IN 6 YEARS

Despite increasing healthcare inflation and economic pressures, Bonitas have managed to keep the weighted average for contribution increase at 8.7% for 2018.

The increase is staggered across all plans. A 7.9% increase was announced on Primary, BonSave and Bonfit – options designed to appeal to younger and healthier families.

An 8.9% increase was revealed on Standard, Standard Select, BonEssential and BonCap. A 9.9% will be applicable to all other options.

To provide members with better healthcare, Bonitas has added further value to plans with new and improved benefits:

  • Childcare –bonitas introduces Babyline to assist parents in keeping their little ones healthy.
  • Screening for congenital hypothyroidism
  • Infant hearing screening benefit
  • New benefit for contraceptives – paid from risk with an annual Rand limit applicable to your plan option.
  • Improved WELLNESS EXTENDER – maximizing your benefits with limits increased by 15% on all plans
  • Unlimited terminal care on all options.
  • Separate dental benefit added to BonFit
  • Preventative care boosted
  • Introducing the Mental Wellness programme

Bonitas Brochure Digital

Contribution Table 2018

MOMENTUM – THE HEALTH EFFECT, your journey to financial wellness in 2018

MOMENTUM – THE HEALTH EFFECT, your journey to financial wellness in 2018

Momentum has grown into the third largest open medical scheme with more than 150 000 lives covered in a market that has been stagnant for the last couple of years, because of their unique product offering.

Based on the successes seen over the past few years, there were no major benefit changes but a few enhancements and the introduction of a new plan option; the Impact option.

Enhancements to the Health Platform Maternity Benefit, for Incentive, Extender and Summit members.

Contribution increase for Momentum 2018

If you review Momentum Health’s average risk contributions, it is still one of the lowest in the market, thus members experience a low increase off a lower risk contribution rate, with no benefit cuts.

2018 in no different – Momentum Health’s average increase is 8.3%, excluding the lowest income band on the Ingwe option.

Introduction to the Impact option

The introduction of the Impact option, with contributions that are linked to income bands, it extends the opportunity to access private healthcare to more South Africans.

Offering state as chronic provider and the Impact Primary Care network for day-to-day benefits, this option provides younger entry level consumers affordable access to more benefits than most low cost solutions.

Momentum Health Marketing Brochure

Health Complementary Brochure

The effects of the drought on south African agriculture

The effects of the drought on south African agriculture

South Africa is battling one of the worst droughts ever recorded that already started in early 2015. Since 1904, rainfall in all nine provinces has averaged 608mm per annum, while in 2015 South Africa received an average of only 403mm (66% of the annual average). Previously the lowest rainfall received in a year was in 1945, when the country received 437mm (72%). The forecast for 2017 looks even more grim, especially for the agricultural sector.

The Western Cape has a very important part to play in the agri-economy in South Africa. Water levels remain low, so crops must be managed carefully to get it through to harvest.

Why do we need rain?

The Western Cape is probably one of the most important provinces in regard to export of agricultural products. The deciduous fruit industry, table grapes, citrus, wine and vegetable is setting base in the western cape, which is key export produce that contribute significantly to the economy.

Water shortage is not the only impacting component in the agricultural sector. The heat and the strong winds will also have an impact on the cosmetic appearance of the product, which will impact the marketability of the product and then the price.

The environmental factors will also have an impact on meat and cash crops(vegetables). Water will be held for long-term crops because it brings in more income, so vegetable will not be planted. In short term we will see shortages of vegetable, consumers need to be concerned about supply price and the situation will worsen towards the end of the year.
The strengthening of the rand against major currencies over the past few months may also have added to the pressure on export prices.

What is the impact on GDP contribution?

The Western Cape contributes 24% to the total GDP in South Africa. Agriculture has a contribution to the GDP of the Western Cape of approximately 4%. The significance is that agriculture and agro-processing is responsible for 18% of employment in the province. The drought will have the biggest impact on seasonal employment in the deciduous fruit industry. Due to possible lower production, less seasonal workers might be employed, with obvious consequences.

Coming as it did after an already below average production season, the combination of the drought and the weaker exchange rate has already impacted severely on the agricultural commodity prices. Furthermore, reduced production volumes will impact on South Africa trade balance. The assumption is, sectors that would normally contribute to a positive trade balance, will shift to a negative trade balance.

What is the long-impact of the drought?

Although agriculture only makes up 4% of the sector when compared to other industries, most of agriculture production, in access of 70%, gets used by the manufacturing industry, the Western Cape is a key contributor to this. So in turn, the whole value chain will suffer.



Fig. 1 Weight of products in the basket which will be affected by the drought

Discovery Health, enhancing benefits, without compromising affordability in 2018

Discovery Health, enhancing benefits, without compromising affordability in 2018

Discovery Health continues to invest extensively in building a better healthcare system, centered on the needs of member and we are proud to announce the following Enhancements on the various options going into 2018:

  • Weighted average contribution increase of 7.9% for 2018
  • Enhanced global treatment Platform to access medical treatment outside of South Africa on the Executive Plan
  • Comprehensive risk-funded maternity and post-birth benefits on ALL PLANS without affecting their medical savings account:
  1. Antenatal consultations
  2. Blood tests
  3. Antenatal classes
  4. Six week consultation
  5. My Pregnancy and My Baby app
  • Over the counter medicine benefit on the Smart Plan for schedule 0-2 medicine, subject to an annual limit:
  1. Classic Smart plan:      R600 per family per year
  2. Essential Smart Plan:  R400 per family per year
  • Introducing Dr Connect app
  • Discovery for Corporates:
  1. Premier wellness experience
  2. Healthy Company care that looks after your Physical, Emotional and Financial risk management of your staff

Verso Health wants to take you on this journey in 2018 where we assist you as the employer and the individual to make your life healthier and care-free.

We invite you to make use of our time for your annual review and hassle-free assistance.

Download 2018 Contributions Table

Download Health Member Guide 2018

Wyvernstone pomegranate seed oil

Wyvernstone pomegranate seed oil

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Direction for use:

  • Can be used directly onto skin and hair. It can also safe for consumption.
  • Apply little bits on the skin, until absorbed. Can also be used with creams.

DOWNLOAD THE BROCHURE

Call us on 021 943 5301 or email us at info@verso-wealth.co.za

Visit our website today at www.verso.co.za

Verso Wealth_Galileo Capital

The content in this article is wholly owned by the Verso Group of Companies. Companies in the Verso Group are authorised Financial Services Providers.

Shocking costs may eat away at your investment

Shocking costs may eat away at your investment

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Good day!

Theo Voster talks to the media on a regular basis, especially NETWORK 24, with focus on investments. The article below received a great deal of attention, which we would like to share with you.

The questions you should ask yourself is:

  • How much do I pay?
  • Do I know what the total cost is, all levels included?

Please inform us if you are unsure about your cost structure. Enjoy the read.

Enjoy the read and please inform us should you wish not to receive any ad-hoc communication.

Shocking costs may eat away at your investment

The Business and Sauvignon-workshops at the “Vryfees” in Bloemfontein were special events – Media 24 has a winner with their Festival Café concept, where all the newspapers, TV channels (kykNET and Via) and magazines are under one roof!

The conversations had with people about the costs they pay for investments and investment advice left a somewhat bitter aftertaste.

I almost find it criminal when an elderly lady and man tell me that an advisor quoted them a starting fee between 3% and 5% on their investments – on a nest egg of R5 million it comes down to a fee of between R150000 and R250000 which goes to the nest egg of the advisor (and that be it from a well-known institution) instead of the investment!!!

There is more than sufficient proof that people who make use of financial advisors are significantly better off than people who don’t.

The question is: If financial advice plays such a major role towards one’s financial wealth, what is a fair price to pay for the service?

Before we get to the cost of advice, the latest study (July 2017) about the value of financial advice comes from the International Longevity Centre in Britain (ILC-UK). What gives this study so much value is that the ILC-UK is independent and is not connected to any financial institution, and focus their attention on research regarding the implications of longevity.

In this study, they looked at actual data of more than 90000 households in England. The conclusion was that the people who made use of financial advisors are better off than those who do not, irrespective of how prosperous they are.

“Poorer” people, in other words, people who must survive on a strict budget, were actually better off, in actual fact they were 21% better off. The more prosperous group of people were 16% better off. This is compared to people who did not make use of financial advice.

This study was performed over a period of 10 to 15 years. As expected, the benefit of advice increased over time and age.

The question is now:

If financial advice adds so much value to your life and financial well-being, what would be a reasonable cost structure for good advice?

To answer the question properly it is important to keep the different costs apart, since apples are not always compared with apples.

The points below are the basis on which the financial advisor eventually will be responsible for financial analysis, planning and implementation together with ongoing management and monitoring of the portfolio:

  1. Money that is deducted from your investment prior to the money being invested (it is normally called structuring-, implementation- or planning fees): There is normally a lot of work to be done prior to presenting a complete plan, for example, things like an analysis, long term financial models and investment recommendations. The starting point is that the cost should be linked to time and ability. As a guideline, it should be somewhere between R7500 and R25000 (if really complicated) if the investor eventually places the investment with the advisor. In the R5 million case above, the planning cost should not be more than R7500!
  2. The fee for the management of the underlying investment portfolio: As a starting point, the total ongoing fee should not exceed 3% of the value of the assets per annum. Depending on the structure of the asset (active vs passive or domestic vs foreign) the 3% per annum could be heavily reduced. To understand the ongoing fees, three elements need to be separated and should be understood separately – although these are eventually added together to calculate the ongoing fee:

  • Advisory fee – approximately 1% of the assets under management; it can be reduced if the investment amount is relatively high and/or the client does not expect too much ongoing input from the advisor. It is also advisable to negotiate a maximum fee per month if it is a large investment.
  • Platform and administration fee – levels between 0.5% and 0.75% for assets under management is a reasonable standard in the unit trust and investment industry.
  • Underlying fund management fee – This fee can vary between from 0.5% to 2% of the assets under management depending on the specific mandate and fund manager.

You need to be cautious of performance fees, “fund-of-fund” fees, transactional costs and wrapper fees, which in some cases can be added!

There are alternatives to the above fee structure, especially where the investor only requests a specific service or transaction. I specifically refer to estate planning, asset allocation and/or portfolio modelling services. In this case the advisor will levy a fee for the specific service and will not be responsible (or earn money) for the long-term performance of the portfolio.

Call us on 021 943 5301 or email us at info@verso-wealth.co.za

Visit our website today at www.verso.co.za

Verso Wealth_Galileo Capital

The content in this article is wholly owned by the Verso Group of Companies. Companies in the Verso Group are authorised Financial Services Providers.

The Advantage of Practicing Goal Based Saving

The Advantage of Practicing Goal Based Saving

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What do you value most in life?

Each one of us is different and we each value things differently. The thing we have in common is that we all have things that we want to achieve more than anything else. These are the personal ambitions that we think about all the time.

It could be that European trip you’ve always dreamed of, or that course you’ve been wanting to take. It could be the house that you want to buy for your family, or a deposit you need for that amazing car you want to buy.

It could be a pesky credit card or clothing account you want to pay off, or that university fund that you want to start for your child.

There are no right and wrong answers when it comes to your personal goals. They are personal. They belong to you and no one can take them away from you. They are big. They are bold. They are adventurous and they will cost you some amount.

Life happens though, and these things that we really want to do get put on the back burner. Often we’ll get to the end of the month and there will be more month left than money. No money left over to save towards our goals.

So we trudge on and the cycle repeats itself. We promise ourselves that we will do something to make our dreams happen, but our hopes are dashed in a pile of invoices and receipts.

No more

There is a simple system that can help us achieve our goals: Goal based saving.

We put our savings goal first, and then spend what’s left.

Often we front load our month with spending and then have nothing left to provide for our goals. With goals based budgeting we provide for our goal first and then make things work with the rest of what we have.

Here are some guidelines

Calculate Gross Salary – Deductions (Retirement, Medical Aid, Tax) first. This will give you your Net Salary.

Take at least 20% of our net salary for our goals.

Spend at most 80% of our net salary for everything else.

The minimum of 20% for our goals needs to be done automatically as a debit order. The salary hits our bank account and 20% immediately gets put away in a separate account or an investment. That 20% has a job to do, for us, and it doesn’t want us to get in its way, making excuses, hesitating and procrastinating. In and out of our

account before we know it and shoulder to the wheel. That is what that 20% is all about.

The bottom line

Is it going to be easy? No. But, one day, when we’ve achieved the things that matter the most to us in life, we’ll look back fondly on our struggles making things work every month with at most 80% of our net salary and smile.

Call us on 021 943 5301 or email us at info@verso-wealth.co.za

Visit our website today at www.verso.co.za

Verso Wealth_Galileo Capital

The content in this article is wholly owned by the Verso Group of Companies. Companies in the Verso Group are authorised Financial Services Providers.