In Touch Newsletter - August 2013

SA women keep secret savings – survey

visa logoGlobal payments technology company Visa disclosed the results of its first annual Women’s Money Matters Survey 2012, one of the most comprehensive reports into women and money conducted in South Africa.

The report surveyed 2 000 women from all income groups across the country who have household financial decision-making responsibilities. The report was designed to highlight women’s attitudes and behaviour towards money matters and identify areas of risk.

Findings in a nutshell:

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  • 71% currently have a savings account at a bank, 37% have a pension or provident fund, 35% own a house
  • 9% indicated that they currently do not own any investments
  • Only 27% look to professionals for money advice
  • 54% say a house is their “preferred investment choice”
  • Only 2% invest directly in shares
  • 30% of women are willing to spend more than six months’ salary on their wedding. Overall, women would spend twice as much on a wedding than on a honeymoon
  • Only 2% spend more than R1 000 per month on beauty treatments
  • Buying shares tops the "worst investment choice" rankings
  • 51% of those who currently own a home do not know the interest rate on their home loan
  • 1 in 2 women currently have a credit card
  • 10% of women in a relationship have a secret bank account that their partner is unaware of. The average secret account has R17 681 in it
  • 70% of women have no short-term insurance
  • Women spend an average R152/month on coffee, 5% spend over R500/month
  • Women spend 24% of their budget on car repayments, and
  • 53% would pay off all their debt if they won the lottery
  • Visa country manager for South Africa Mandy Lamb said the report was an important one, as it gave insights into how South African women approach money and flagged areas of concern and potential improvement.

“Increasingly, it’s women who have their hands on the purse strings. Even for traditionally ‘male’ purchases such as cars, women are having a greater say.

Click here if you’d like to read the full survey results.

Source: Fin24.com

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What to do when your expenses exceed your income and you want to save

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Alice Jordan (37), Account Director at Atmosphere Communications, is married with two children, Luke (4), and Kaitlin (2). Her hobbies are hockey, running, and reading. Alice knows how important saving is but after she’s paid all her expenses she doesn’t have much left to save. Alice would like to know how she can make the most of her income and free up some cash for savings.  

Sanlam’s René Roux responds to Alice’s concerns: I am so delighted you are looking for ways to free up money so that you can save. Being a mom, wife and ‘household administrator’ I know it can be hard juggling the household finances. Here are some simple ways to make your income go further.

Manage your budget successfully

I have found that having a budget is key. If you haven’t done this already, draw up a budget so you know exactly where your money is going each month. Your budget will reveal where you can spend less and save more. You must distinguish between your needs and wants. Clothing is a need, but do you really need that designer item? Pay yourself first, you deserve it! Put money away for savings as soon as you receive your income. Decide on a realistic amount to spend on entertainment and personal expenses and stick to it. Take time when planning your monthly budget and make sure it is not too tight and restrictive, but rather realistic.

Work on your spending habits

It is easy to spend our hard-earned salary on less important expenses – money that could be used for achieving a goal. Because it is so convenient to swipe the plastic, I generally leave my credit cards at home and only bring them out in emergencies. Beware of luxuries dressed up as necessities. Watch out for cash leakage. If cash in your purse disappears leaving you with nothing to show for it, take note of what you spend this cash on. Although it’s tempting to spend more when your income climbs due to well-deserved raises, promotions and smart investing, use those increases to save more.   

Plan your spending

Plan purchases and only buy what you planned to buy. Make a shopping list and stick to it so you don’t overspend. When buying big, expensive items do an online search for price comparisons. Always ask yourself: do I really need this? If the answer is no, put the item back and walk away. Carry less cash and leave your credit cards at home unless you need to make a planned purchase.

Make small changes

Small savings can add up to big savings. Buy generic wherever possible. Bring your own lunch to work. Look at your cell phone bills and make sure you are using your free minutes and that you are on the most cost-effective plan. Use pre-paid cards for your children’s cell phones. Cut out on long-distance telephone calls, call when the rates are cheaper or send an email instead. Cut back on eating out and rekindle the art of eating at home creatively. Search online for new recipe ideas and discover your inner chef. (Tip: Be sure to get the family involved in the washing up afterwards). Do grocery shopping less frequently to reduce possible impulse buys. Wait until movies come out on video or DVD instead of going to the cinema. We all know how costly such an outing can be.

It is possible to free up money and still maintain your current lifestyle. If you free up cash and avoid wasteful spending you will have extra money at the end of the month to put towards achieving goals – be it saving the deposit for a house, educating your children or even going on that once-in-a-lifetime holiday. The result: a better lifestyle for you and your family!

Source: Sanlam

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Proper financial planning and severe illness cover provides peace of mind

According to worldwidebreastcancer.com, in 2010 nearly 1.5 million people were told "you have breast cancer". Increasingly, we are seeing women like Angelina Jolie and Guiliana Rancic opt for double mastectomies to prevent breast cancer or to reduce the chances of it resurfacing. The medical bills, reconstructive surgery, out-of-hospital care and time off from work are additional worries that one does not need when faced with such devastating news. Proper financial planning, which includes medical and severe illness cover, can provide peace of mind and the resources to take care of you when you need it.

happy familyOf all the things we could “inherit” from our mothers – good bone structure, a sense of humour, powerful intuition – a disease such as breast cancer is one of the least desirable. “The hereditary factor is probably the most well-known risk factor,” says Sylvia Walker, Market Development Manager, Old Mutual. “But there are a host of other risk factors such as our diet and lifestyle, when we started menstruating or went through menopause.”  

And yet, there are also scores of women who have contracted the disease, to which none of the risk factors apply.  Breast cancer research is making new advances every year, but there are still many unanswered questions surrounding the disease.  It is simply impossible to predict whether you will get it or not.

One thing that is certain, though, is that the incidence is on the increase, both internationally and in South Africa, with around 1 in 8 women expected to get breast cancer at some point in their lives.

With the majority of breast cancer patients being over 50, the disease is often viewed as an older woman’s disease, but there are scores of cases of women in their 20’s and 30’s being diagnosed on a daily basis. 

“Thanks to advances in medical science, the outlook for breast cancer patients is very good,” continues Sylvia.  “The earlier the disease is detected, the greater the survival rate.  And our only weapon is to go for regular check-ups, and annual mammograms after 40.”

Breast cancer is diagnosed in one of four stages with Stage 1 being the earliest, and Stage 4 the most advanced.  If detected in Stage 1, there can be a survival rate of as high as 97%.

“All women are encouraged to do regular self-examinations, and go for medical check-ups.  The inconvenience of a check-up is far less than the stress of being diagnosed with breast cancer in an advanced stage.” says Sylvia.

The financial implications of contracting a disease such as breast cancer can be vast, and for many cancer patients, financial worries often dominate their thoughts.  There are two main financial aspects to consider:

  • the cost of treatment
  • the loss of income while recuperating

The cost of treatment can amount to as much as R500 000 in the first year, and then there is post-cancer medication for 5 years following the diagnosis.  The first financial defence is to belong to a good medical scheme.  However, many people do not know what their medical scheme covers, and only find out when a claim is rejected!  All schemes will case-manage for a condition such as breast cancer, and may impose limits for certain types of treatments (such as Oncology).  It is critical to understand what treatment your scheme covers, and what the benefit limits are.

The other aspect which can have vast financial implications is the loss of income while recuperating. With a disease such as breast cancer, the patient can be out of work for a while (and this can be an extended period of time, depending on the nature of the illness.  Chemotherapy, for instance, can last 6 months with the patient being emotionally and physically drained for this time, and even longer).  It is possible that the patient returns to their original employment after the treatment, but this is not always possible.  Consider some scenarios:  if the person works for a small firm, will they keep him / her on the payroll until they can return to work (or will they be forced to dismiss them due to ill health – perfectly legal?).  If they are self-employed (as large parts of the population are today), no work means no pay.  A housewife could be hard hit, as someone would have to be employed to do her duties at home, as well as take care of her.

The bottom line is that valuable assets may have to be sold to financially survive a severe illness!  Proper financial planning, which incorporates severe illness cover, can prevent this situation.

Many companies offer severe illness cover.  In some instances there are maximum age limits for when benefits pay out, and for the severity of the illness.  It is important to have cover for as long as you are alive, and have a cash payout on diagnosis, irrespective of the severity of the illness.

While we cannot predict the future, we can sleep easier knowing that we are financially prepared.  Speak to your Financial Advisor today about severe illness cover and get financial peace-of-mind.  

Source: Old Mutual

 

Debit vs. credit cards - the key differences

Many consumers view debit and credit cards as the most convenient way to pay for day-to-day purchases. These two cards look the same and so many consumers are unclear about their significant differences. Below are some of the important differences between these two cards to help you swipe your plastic wisely.

Difference 1: Loan vs available cash

The most notable difference is that a credit card allows you to purchase goods and services via a pre-approved loan or overdraft (meaning it is not your own money), while a debit card allows you immediate access to the available cash or savings that is in your account. When you make a purchase or draw money with your debit card the payment is deducted immediately from your bank account. When making a purchase you need to enter a Personal Identification Number (PIN) to allow the funds to be transferred from your bank account to the merchant’s bank account. If there is not enough money in your account your purchase will be declined. Most cards nowadays are chipped and whether it’s a debit or credit card you need to insert a PIN for the transaction to proceed, as an added security measure.  

Difference 2: Ease of obtaining either of the cards

Obtaining a debit card is often easier than getting a credit card because your credit risk profile will not significantly impact the account. You only need to open a savings, transmission or cheque account to obtain a debit card. When applying for a credit card you will need to fill out an application form and the service provider will need to determine whether you are an acceptable credit risk before granting you a credit card. The credit made available to you depends on your credit rating and income earned per month.

Difference 3: Interest earned vs interest paid

Since a debit card does not allow you to spend what you don’t have you will not accrue debt and thus will not be charged interest on it. Be cautious of credit card spending when interest rates are high. Depending on the amount and over what period you are able to repay your purchase, you could end up paying a lot more than the item is worth due to the interest charged on top of the purchase price.

Difference 4: Getting refunded

Both cards allow you to avoid carrying cash but when you return an item to a store that was purchased using a debit card, cash will be returned to you and not transferred into your bank account. If you return an item that was purchased using your credit card the credit amount will be reversed electronically on you card.

Difference 5: Financial discipline

When it comes to financial discipline, debit cards are generally a better option as they prevent you from spending money that you do not have. A credit card can come in handy when you are short of cash. If you repay the money within 50 to 60 days (differs depending on your bank) the purchase will be treated as cash and you will not be charged interest on it. But be careful as it is easy to get carried away with buying on credit and trapping yourself in unnecessary debt. Remember that a credit card holds money that is on loan to you. If used wisely credit cards can help you establish a positive credit history that could result in favourable credit terms, such as lower interest rates or fees when taking out a mortgage or applying for vehicle finance.

Both cards need to be used responsibly. Debit-card abuse can leave you cash-strapped while credit-card abuse can lead to serious debt. Be mindful of your spending regardless of your payment method.

Source: Sanlam

 

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Feel free to contact us if your circumstances or needs have changed and your financial plan needs to be updated.

We look forward to hearing from you!

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