But just as we can’t predict the weather, you never know when you might need to pay for car repairs, household emergencies or hospital bills. Any extra amount saved each month is better than nothing. As hard as it is, the key is to break the hand-to-mouth pattern is by getting a grip on your expenses.
Let’s build our savings plan this Money Smart Week. We asked the Head of Retail Distribution at Sanlam Investments, Gielie de Swardt, to guide you on this exciting journey to live a life of confidence.
An emergency fund should ideally have enough savings to cover three times your monthly expenses. This will help you to self-fund day-to-day expenses and meet your monthly debt obligations if you can’t earn an income. While this amount of money might seem unrealistic, a good initial target would be to reduce your expenses to 80% of the income you take home. If you save the other 20%, it will take you about a year to build up your emergency fund.
Don’t think of the ‘rainy day’ scenario as an unlikely one. As the cost of living goes up, your ability to cover additional unplanned expenses reduces if you haven’t set aside an emergency fund. The best time to start is from your very next pay cheque.
If you have a specific amount you want to save towards, Sanlam’s Smart Invest will help you calculate how much to put away each month. You can also track your money 24/7 to see how it’s performing. Get started now and build your first investment portfolio for a rainy day.
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Julie Etheridge Account Director: Atmosphere Communication
Finola Quarsingh Head of Communications & Public Relations