Last month I talked about Make as Much Money as You Can. This month let's dive into Step 2 - Do Not Spend More Than You Earn. The adage "live within your means" comes to mind here. To “live within your means” simply means to spend less on your lifestyle than you generate in earnings. Your “means” is your income. To live within that threshold, spend less than you earn. This requires self-control. A person does physical exercise to improve his muscular physique. A person does quizzes to improve his mental sharpness. Similarly, one has to exercise his financial muscle, live frugally and save money. Here are some tips to help you save money every month:
I am not saying, "Don't have good material things in life." God blesses us with life and all the abundance in life, we should enjoy having things that make us feel good, better and happy. What I am saying is live within your means. Be content with what you have. Do aim for higher, but spend what you can comfortably afford. Warren Buffett, arguably one of the greatest investors of our time, is a well-known billionaire. He has great wealth, but he lives frugally. He bought his house in 1958 for US$31,500, the equivalent of US$285,000 today, and he still lives in the same house. In a BBC documentary, his daughter said he bought cars that he could get at reduced prices, like those that were hail-damaged. The cars were fixed and didn’t look hail-damaged and became a regular part of the Buffett lifestyle. “You’ve got to understand, he keeps cars until I tell him, ‘This is getting embarrassing — time for a new car,'” said his daughter in the documentary. Buffett also told Forbes in 2014 about his car-buying habits — or lack thereof. “The truth is, I only drive about 3,500 miles a year so I will buy a new car very infrequently,” he said. Remember this the next you’re in the market for a car: Since cars tend to depreciate quickly, it can be better for your finances if you try to keep your well-working car for as long as possible — or at least opt to buy a used car instead of new. (source: Business Insider) Buffett can easily afford to live like these Joneses, one hundred times over. But he doesn't choose to. So what are your reasons for keeping up with Joneses? 5. Resist the marketing and advertising bombardment When you visit websites, listen to the radio, watch YouTube or TV, you will see or hear a lot of advertisements. This is the business model of media business, they get most of their revenue from advertisers. These advertisers advertise their products and services, to make you aware of them, and trying to get you to action.While it is good to be aware of products, services and specials out there, you need to learn to be a smart consumer. Ask yourself:
If at least three of your answers to the questions above are “Yes", then buy. If not, you may want to reconsider your buying decision. 6. Resist the temptation of buy now and pay later. Many retailers give you easy terms, you can pay for something over 6, 12, 24 or even 36 months. I describe these as financial shackles. These easy terms come with interest and charges. For the financial astute, these are poison. For the financial illiterate, these are gospel. I would like to give a couple of real life advertisements to illustrate (by the way, I have nothing against these companies used in the examples): Exhibit 1: Incredible Connection, HP Envy 13 X360 RYZEN 7 4700U 8GB 512GB 2-1 laptop. Retail price R21,999. You can pay as little as R1,375 (small print: pm (per month) x 24 months, Rate 23.75%, credit price R33,000) The keyword here is "as little as". This means this is the minimum you would pay, and possible you could pay more than this. Just simple arithmetic, R33,000 over R21,999 means you pay 50% more for the same laptop, for the luxury of "buy now, pay later". Exhibit 2: Dial-A-Bed, Simmons Healthsmart Plush Queen Mattress Standard Length, Retail price R26,599 (on special). Or pay on credit "from" R2,522 per month. When you click on the link for credit, 12 monthly repayments (including interest charged at 20.50%* per year and excluding Mobicred's set-up and service fees). The keyword here is "from". This means this is the minimum you would pay, and you will definitely pay more than this due to additional fees and charges. Just simple arithmetic, R30,264 (R2,522*12) over R26,599 means you pay 14% more for the same mattress, for the luxury of "buy now, pay later". This is before fees and charges. The only exception to this is when you buy a house or a car. For most people, we don't have the money upfront to buy a house or a car, which cost a lot of money. It will then make sense to take out a home loan or vehicle finance to afford it. For people that understand money and interest, they make it. For people that don't understand money and interest, they pay it. 7. Save for the thing(s) you need or want. f you need or want something, save up for it. Use a separate savings bank account for this purpose. Save money every month, and transfer the savings to this savings account. See it grow. Accumulate. When you have saved up the money, use that money to buy that thing. If you do so, when you buy that thing you want with the money you have saved up, it gives you a sense of achievement and satisfaction. So, what is your story? Write to us to share with us.
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Finance Minister Tito Mboweni gave his budget speech on 24 February. Overall it is a taxpayer and investor friendly budget. Old Mutual has a nice summary of tax changes, we share with readers below. Here’s what you need to know about your IT3B and IT3C certificates: The IT3B certificate is all about the income you’ve generated from your investment. It’s going to reflect: Local dividends: this is the amount which has been paid to you in dividends from JSE listed companies in the last tax year. We automatically pay 20% dividend withholding tax on these for you, so this appears on your certificate to let SARS know that it’s done and dusted. Make sure you disclose this on your tax return and that’s it - finished and klaar. Foreign dividends: this represents any dividends you received from JSE listed companies which earn money overseas. We’ve paid the 15% dividend withholding tax on your behalf, but you still need to disclose this on your tax return. Taxable dividends: This represents REIT (Real Estate Investment Trust) distribution and applies to those of you who hold shares in a company that invests in property. Interest: This amount of interest, which you earn on local and foreign investments, is considered as income and you'll need to declare it to SARS. Bank Accounts Interest: This is the interest you earn on your bank accounts and deposit accounts. Any interest you earn in a year over R23 800 (R34 500 if older than 65) is taxable when you submit your tax return. The IT3C certificate is all about capital gains. How much did your investment grow? Did you sell anything? Did you earn any profit by doing so? You’re only taxed on shares or unit trusts that you sell. Your IT3C certificate is going to show: A list of companies or unit trusts you’ve invested in; How many shares/units you have in each and how much you bought them for. Because you can buy shares for a certain price on one day, and then buy more of the same shares on another day when the price is different, the cost per share is going to be shown as an average of those prices – to keep things simple! So if you bought 1 share at R50 on Monday and another at R100 on Wednesday, you’d have two shares which you paid R150 in total for. Even though they were bought at different prices, the average cost per share is going to be: R150 divided by 2 shares = R75.00 per share. If you’ve sold a share at a higher price than when you bought it, you’ve made yourself some dosh haven’t you? SARS is going to want in on that. ‘Proceeds’ is going to reflect the amount you sold your shares at and ‘Profit/loss’ is going to reflect how much money you made or lost in that sale. The good news is that SARS is only interested in this amount if it is greater than R40 000 – that’s when you’ll start getting taxed on it. Adapted from: Easy Equities The world has really gone digital for anything and everything. Discovery has their app available for any person who has at least one active Discovery product. To start using the app you must be registered on Discovery website. If you have not registered you can click this link to take you through the steps Click here. You will use the same username and password for the app as for the Discovery website. To assist with downloading the Discovery App, please click link: How to download the Discovery App If you have a Discovery Medical aid you may do the following on the app;
See below for listed details: Digital cards
Please click here for list of screening and benefit covers Track Vitality status and goals
If you have any questions on Discovery health mobile app, please contact Tammy or Jo in our Health department, tel: 011 658-1333, email: service@daberistic.com Prevention is always better than cure and that is the main objective of the screening benefit. Medical Aids strive to help their members in detecting medical conditions early. The Screening and Prevention Benefit covers preventive tests, screenings, and a seasonal flu vaccination (for members registered for certain chronic conditions and members over the age of 65) on all Discovery Health Medical Scheme Plans. Having these specific tests conducted (up to the specified number) will not impact your day to day benefits. 1. Tests covered by the benefit:
2. The Vitality Check, a group test done at network pharmacies include:
3. Seasonal flu vaccination – you qualify each year if you’re over age of 65 or registered for one of the below chronic conditions:
4. Screening for kids
You may have certain co-payments
South African Market Update South African equities ended higher for a fourth consecutive month, driven largely by strong performance from large cap resource counters on the back of significant positive commodity price moves. Local bonds ended the month with flat performance, despite developed market sovereign bonds selling off significantly during February and ending with their worst monthly performance in over 35 years. Local listed property ended the month with strong performance in line with other SA risk assets, as investors looked forward to a resumption of economic activity amid declining Covid-19 cases in the country. The rand was broadly unchanged against most major developed market currencies, despite significant volatility during the month in connection with the budget speech as well as global bond yield movements. South African Economic Update On 24 February, Finance Minister Tito Mboweni tabled the 2021/2022 Budget in Parliament. The minister announced that revenue is expected to be around R100 billion ahead of expectations, largely due to tax collections from the mining sector coming in higher than expected due to booming commodity prices, coupled with a recovery in VAT. While the country’s debt burden remains unsustainable, the moves by National Treasury to cancel a proposed R40 billion in tax hikes over the next four years and above inflation increases in personal income tax brackets will be welcomed by local citizens. South African President Cyril Ramaphosa announced on 28 February that the country will move to a level 1 lockdown, to aid a resumption of economic activity amid declining daily Covid-19 cases. SA headline CPI moved higher to a year-on-year figure of 3.2% for January (from 3.1% in December), with increases in fuel, food and non-alcoholic beverages being the largest contributors to the move. Global Market and Economic Update Most major equity markets managed to end the month in positive territory, despite significant volatility in global bond markets towards the end of February amid concerns of rising inflation expectations and possible future interest rate moves. Markets were driven higher during the month by strong Q4 2020 company earnings announcements and positive news on vaccine rollouts, with the US approving the Johnson and Johnson vaccine on 28 February. There was also progress on a new US stimulus package, with a $1.9 trillion Covid relief bill passed by the US House of Representatives, following which it will be considered by the US Senate. Source: Morningstar
Morningstar has published this excellent article on Slow and Steady Wins the Race - It Is OK to Build the Wealth Slowly. It talks about the importance of perseverance, patience and compound interest in building wealth. Building wealth is a journey, it is like a marathon. It is not a 100m sprint. We share with the readers here. |
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