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s we approach the end of the year, it’s a good time to review and take stock of your personal finances. When it comes to South Africans and their personal finances, research suggests two startling facts: ¥ South Africans on average spend 75% of their take-home pay on repaying debt. ¥ Only 6% of South Africans are able to retire financially free. No matter what your current personal financial situation is, it is never too late to make some changes that will improve your current and future financial position. We would like to suggest the following six golden rules when it comes to taking charge of your finances: RULE # 1 - Spend less than what you earn If everyone followed rule number 1, no one would have any financial problems. Breaking rule number 1 is the root of many financial problems. If you don’t have the money, you can’t afford it. Avoid the buy now, pay later syndrome. RULE # 2 - Save first and spend what's left Not the other way around! The first thing you should do when you get paid is to put away your committed savings amount. Whatever is left thereafter is what you have left for spending. If you spend first, you will most probably spend everything and have nothing or very little left to save.
How healthy are your personal
FINANCES?
MELISSA JACOBS OF MJ ACCOUNTANTS TALKS US THROUGH SIX GOLDEN RULES ON HOW TO TAKE CHARGE OF YOUR FINANCES return on your investment. This may mean putting your ego aside and not driving the fanciest car around, etc. RULE # 6 - Make full use of all the tax allowances available to you Have a professional help you with your taxes to ensure you are making full use of tax-free investments and claiming all the available deductions against your taxable income.
RULE # 3 - Other than your house and car, pay cash for everything Very few people are able to buy a house and/or car for cash, so we regard these as acceptable items to finance via debt. For everything else, save the cash and then buy the item. Following this rule will ensure you never get over-indebted. RULE # 4 - Avoid debt at all costs There is good debt and bad debt. Good debt would be a bond on your house. Bad debt
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would be credit card debt, short term loans, personal overdraft, etc. These types of debt are expensive and if you don’t manage them well, can land you in a debt trap. RULE # 5 - Put your money where it grows, not where it shows Avoid the temptation of buying expensive toys to make yourself look rich. Rather invest your money into appreciating assets where you will earn a
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GIVE US A CALL
to discuss your current tax affairs and how we can assist to legally reduce these. Contact Melissa melissa@mjacc.co.za; 087 821 7110; www.mjacc.co.za
MJ CHARTERED ACCOUNTANTS
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