What are you saving for?

03 September 2015 - 14:08 By ABSA Advertorial
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As from next week, you may start noticing a lot of birthday notifications on your Facebook page. 

As it turns out, September is not only the time for spring cleaning and new beginnings, but statistics recently compiled by a Harvard public policy professor showed that September is also the most popular month for birthdays. This is likely due to the fact that the holiday season is nine months before.

Having a baby is one of life’s most exhilarating and fulfilling experiences. It has financial implications too, and most new and future parents need to start saving straight away if they want to be financially prepared to fulfil the dreams they hold for their children.

Many new parents however neglect to take care of their own futures first. “It may sound counterintuitive to begin by taking care of yourself. But here’s the thing: Making sure that you and your spouse are taken care of is the best way to set your baby up for success,” says Matt Hunter, Head of Savings and Investments at Absa Retail Banking.

Take care of your own future first

You can start doing this by considering four simple steps that involve some planning and a bit of discipline.

  1. The power of a savings jar

Start saving for a rainy day - even if you only have a small amount to set aside on a regular basis. When you get home after work, simply toss the loose coins you are carrying in your wallet or pocket into a jar and see how fast it fills.  The most negligible monthly saving can lead to significant changes to your family’s long-term financial wellbeing and the savings option you select, depends on your lifestyle and immediate or longer-term savings needs. . 

  1. Plan for your retirement

By saving for your retirement from an early age, you ultimately free your little one from the financial burden of caring for you in your old age. Consider alternative, more affordable ways to invest in your retirement, such as the new Tax Free Savings account. The money paid into a tax-free savings account is not taxed when cashed out, and neither is the interest that it gains. You are allowed to invest a maximum of R30 000 a year into a tax free account, without exceeding the lifetime limit of R500 000.

  1. Document your will

If you’ve got a spouse and a baby on the way and don’t have a will—or haven’t updated it in a while—this should be your first priority. You can do this quickly and inexpensively through a variety of online services or by consulting a specialist.  

  1. Insure your life

Life insurance doesn’t cost much compared to the peace of mind it provides. As a couple, the best option is to arrange life cover equal to ten times your gross annual income. 

Then take care of the baby’s future

Once you’ve taken care of your own future, you will be free to focus all your attention where it belongs - welcoming your new arrival into the world.

Soon you will also be ready to move forward with every parent’s dream: providing the best for your baby’s future. “It’s important that you and your spouse regularly talk about what that future looks like for your family. The average cost of a child’s primary and secondary education is a scary prospect for many parents and the thought of your child going to university can be daunting,” says Matt.

Whether your child has just started their school career or has already matriculated, there are many options for parents to provide the money their children may need to finance their education. “Investing in your child's education is often one of the most important yet challenging
saving endeavours you can undertake, and as a parent you don't need any reminding of the urgency to start
planning and saving today. As a matter of fact, saving is what you should be doing on a regular and disciplined basis – it isn’t always easy, but the rewards are definitely worth the wait,” concludes Matt.

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