Financial planning 101: Where to start with your savings

Julie Brownlee, Fsp Invest, 06 Nov. 2014

Tags: savings, personal financial, financial planning, starting to save, financial independence, wealth building,

Your first step towards financial independence and wealth building is saving money. You need to have something to work with.

This means you need to start setting aside money on a monthly basis. Once you’ve built up a reasonable amount of cash, you can think about how to get your money to work harder for you.

So what should you consider when it comes to your savings?

Let’s take a closer look…

Why you need savings

If you want to invest or save for a deposit for a house or other big financial commitment, you need to start putting money aside.

Before you think about committing any of your savings to any purpose, you need to ensure that you have a financial safety net.

With this in mind, you need to build up enough savings to cover anything between three and six months’ worth of expenses. For example, if you lost your job, this would allow you to still pay your bills and expenses, and give you time to look for another job.

What sort of savings account should you opt for?

For your emergency fund and for anything else that you need instant access to your cash for, then a standard savings account is your best bet.

An account like this won’t have great interest rates, but you won’t have to pay penalties to withdraw from it.

If you know that you’re not going to need access to some of your cash for a period of time, it’s worth looking at fixed deposit accounts. You should get a higher rate of interest. But there will be penalties if you need to withdraw cash.

Once you’ve saved up the amount of money you need for your emergency fund, then you can start working towards savings for investing and other forms of wealth creation.

If you have a small amount of money saved already for investing, you could consider putting it into a unit trust. Many unit trusts allow you to invest monthly from around R200 to R300 a month.

This gives you a chance to get your money working in the market as you continue to save.

So there you have it, where to start with your savings.

*********** New release ************

The only three numbers you need to take complete control of your financial future

In marriage, there are three numbers you must know by heart: Your spouse’s birthday (October 18 for me), your anniversary (April 19 for me), and how many minutes you can be late before you are in trouble (12 for just about everyone).

To run a business, there are also three numbers you must know: Net cash flow, the cost of acquiring a new customer, and that customer’s lifetime value.

It’s no different when it comes to financial planning. Pursuing wealth without knowing these three numbers is like driving around searching for a particular restaurant without any idea of its address.

It doesn’t have to be that way. You can chart a direct path to wealth with these three numbers. And you can start today.

Click here to discover the only three numbers you need to take complete control of your financial future.


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