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Hi Tribe,

Last week Friday, I did a one-on-one coaching with a very money savvy lady who just needed a bit of direction in terms of the different investments available in the market. What struck me about her was her determination and astuteness in managing her money.

She’s young, earns an income between R10K-R15K, for some, this does not sound like it’s a lot, but what she has managed to do with her income is astounding! She saves almost 60% of her income every month! And one of the ways she had maintained her savings is through a Stokvel!

That is why I found these insights from Old Mutual important. Tribe, have you been part of a Stokvel? How has it helped you save for your dreams?

Could property finance be turned on its head in the most dramatic, unexpected way possible? Evidence from the 2019 Old Mutual Savings and Investment Monitor shows it is entirely possible that a new, parallel property finance market could be born out of the rapid rise of property stokvels.

This potential for disruption is enormous considering that the size of the traditional stokvel market has grown to an estimated annual value of over R40 billion.

“What started as an alternative savings mechanism outside of formal financial systems is today a significant force. And there’s no reason to believe that property finance is immune to millions of individuals pooling their resources for the benefit of stokvel members,” says Lynette Nicholson, Head of Research at Old Mutual.

The results of the annual Old Mutual Savings & Investment Monitor, released today in Sandton, tracks shifts in the financial attitudes and behaviour of South Africa’s working metropolitan population. The research into property stokvels was included for the first time in this year’s survey, and polled 15 founders and 105 members of these schemes.

Their responses reflect an increasing sense of self-empowerment as well as dissatisfaction with traditional lenders. This discontent ranges from barriers to finance and lengthy mortgage periods to punitive measures such as repossession for payment arrears.

Stokvels are not only familiar structures in Black communities, but they also help to retain ownership and money within these communities. Applying this outlook to property ownership creates an avenue for building generational wealth and the dignity associated with owning a home.

“The true power of these schemes is reflected in the numbers – of both membership and their combined contributions,” Nicholson says. “The largest group that was surveyed, of more than 550 members, accumulates a staggering R24 million a year from monthly contributions that range from R3 500 to R15 000.

“While that group may be an outlier in terms of size and volume of contributions, it’s not uncommon for members to contribute around R2 500 a month. A group with 100 members can therefore easily reach an annual investment of R3 million and a group of 30 can accumulate R900 000 a year off relatively modest monthly contributions.”

The more ambitious property stokvels are building investment property portfolios that are used to create generational wealth, while many assist members to buy or build a family home. Others are focused on helping members buy materials needed to complete a project.

Of the property stokvels that focus on home ownership and building homes for its members, the study reveals that members are predominantly female (89%), with 52% aged between 35 and 49. The younger members, below 35, make up 16% of membership and those over 50 constitute 31%.

One striking characteristic of these schemes is their unflinching focus on property finance, refraining from personal loans for other purposes.

They also have sophisticated governance in the form of a scheme constitutions, using application forms as the contract between members and the scheme.

“It is clear from the responses to the survey that members see greater value and experience a greater sense of community from these schemes. The ability for lower income earners to realise a dream of owning their own home is also extremely powerful,” Nicholson says.

For further information on these insights, go to: www.oldmutual.co.za/savingsmonitor

#KnowBetterDoBetter #savings #investments

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It’s important to understand which RA will suit your lifestyle

A retirement annuity (RA) is a pension plan designed for individuals to build up and accumulate money for retirement in a tax efficient way. It is a vehicle to save towards retirement.

Some benefits of an RA

  • You don’t pay tax on RA investment returns, such as interest income, dividends and capital gains.
  • The maximum tax-beneficial contribution is up to 27.5% of the greater remuneration or taxable income, with an overall annual limit of R350 000 (this includes RAs, pension funds and provident funds).
  • One of the rules is that you cannot access your RA funds before the age of 55. This prevents premature cashing out.
  • Unlike a pension or provident fund, where the ultimate decision rests with the trustees on how the funds will be paid out on death, with an RA, your appointed beneficiaries are paid out directly.
  • If you leave your employer, you can transfer your pension or provident fund into an RA without paying any tax.
  • To a large extent, your RA is safeguarded against creditors, meaning that creditors cannot touch or come after it.

Saving in an RA is a long-term investment and your fund choice should reflect the life stage you are in.

Although you do have access to all the different asset classes, there is an asset allocation limitation. This is called regulation 28, which limits equity exposure to 75% of a portfolio – 30% can be held offshore, with an additional 10% in the rest of Africa.

Not all RA’s are made equal.

While they are one of the best ways to save for retirement, they can sometimes be riddled with costs, which is counterproductive. The high costs can rob you of potential good returns in the long run.

For example, a couple of weeks ago, I received an email from one of my readers asking for a second opinion on a quote he had received for an RA.

The gentleman was 15 years from reaching the age of 55 and wanted to top up his pension fund by saving in an RA.

Charge category Year 1 Year 3 Year 5 Term to maturity

 

Investment management 1.4% 1.4% 1.4% 1.4%
Advice 1.3% 1.3% 1.3% 0.6%
Administration 11.2% 5.2% 3.9% 2.4%
Other 0.0% 0.0% -1.5% -1.6%
Effective annual cost 13.9% 7.9% 5.1% 2.8%

It goes without saying that it was exorbitant. It is also designed to have a penalty cost if you cancel because the fees only reduce over time.

That said, even a fee of 2.8% a year is too high and would erode your total return by as much as 40% over a 30-year period. There are many RAs that have fees as low as 1% a year, but, at the very least, aim for the fee to be less than 2%.

It is important to go through a quote thoroughly before you sign on the dotted line.

If you have an existing RA that perhaps you are not happy with, you can transfer it from one service provider to another without being taxed. This is called a section 14 transfer.

However, you can incur penalties, depending on your service provider. For RAs with life insurance companies, you could incur early termination fees, whereas, with a unit trust retirement annuity, there are no penalties.

When deciding to move your RA from one provider to the next, it is important to do a detailed analysis of the financial impact before and after the move.

What happens at retirement?

When you retire, you are allowed to take one-third in cash (this is subject to the R500 000 limit for all your retirement funds) and invest the remaining two thirds.

The two-thirds is meant for you to purchase an annuity. You have the option to either invest in a living annuity or a guaranteed life annuity. The living annuity is an investment-type product, while the guaranteed annuity is an insurance-type product.

With the living annuity, you have the flexibility to choose your income drawdown between 2.5% and 17.5%. Each year, on the anniversary of your investment, you can change your income percentage.

Although this is a great feature of the living annuity, most people draw the maximum, which means they may well run out of money during retirement.

Another advantage of a living annuity is that any remaining capital on death will go to your beneficiaries. However, in exchange for this flexibility of having beneficiaries, you take on the risk that the income may not last for 25 or 30 years, and there is also the risk that the investment returns may be poor.

Unlike with a living annuity, where there is potential to outlive your retirement savings, a guaranteed annuity will ensure you have a secure, pre-determined income for the rest of your life. This is the biggest distinction between a living annuity and a life annuity.

The disadvantage, however, is that your heirs will not be able to inherit any capital that might be left over when you die.

When considering an RA, it is essential to go through your documents thoroughly and do not be afraid to ask lots of questions.

*This article first appeared in City Press

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Costs to consider before having a baby

The post Which RA is suitable for your lifestyle? appeared first on Woman & Finance.

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Having kids can be an amazing and fulfilling experience, but believe me, it comes with a lot more than just the beautiful nursery and the cute clothes; having a baby comes with many costs and decisions that impact your overall finances, and often we underestimate these costs and decisions.

  • EDUCATION

Education is one of the biggest expenses for parents. The cost of education year on year normally exceeds inflation. According to Old Mutual, the cost of education is expected to increase by about 9% per year.

Parents often forget about the hidden costs such as extramural activities, vacation, books, uniforms, and transport, among others. These can run into thousands each year.

That is why planning ahead is so important. As a parent, you need to start saving for your child’s education as early as possible.

Consider a tax-free savings account or exchange-traded funds for your education savings goal.

  • BUDGET

Even before they go to preschool, children bring about a lot of changes to your existing budget. As a first-time mom, nothing could have prepared me for the sheer amount of nappies we had to buy!

The once-off costs such as a pram, car seat, getting the nursery ready and related costs, can be budgeted and planned for in time.

The biggest additions to your new family’s budget are the day-to-day needs of an infant/toddler – that is nappies, clothes, formula or groceries – and expenses that cover your baby’s toys and books to stimulate them as they grow.

  • MEDICAL AID

From pregnancy there are a lot of visits to the gynaecologist and many tests are done to ensure that mom and baby are in good health. This does not come cheap! It is estimated that for private healthcare, with all the antenatal visits and important scans, this can set you back more than R15 000, and your baby is not even born yet!

Then there are costs of giving birth as well. Post delivery, for the first 24 months of a child’s life, there are a lot of visits to the clinic or the paediatrician, all of which can cost a lot of money.

That is why it is important to scrutinise your medical aid to check what it covers during pregnancy and after the baby is born. And also take advantage of any free perks your medical aid might offer.

  • CHILDCARE

Although some people are able to stay at home for a while until their kids are old enough, many other parents don’t have that option.

One would either have to send the kids to daycare or enlist the help of a nanny or helper.

Depending on your daycare requirements and the area where you live, daycare cost can cost anything upwards of R3 000 per month.

According to the National Minimum Wage Bill, which came into effect on January 1, 2019, you should be paying your helper/nanny no less than R2 669.24 per month if you live in a major metropolitan area.

  • INSURANCE

If you don’t have life insurance and other living benefits – that is critical illness, disability or income protector – it’s time for you to purchase that policy.

A life insurance policy can help ensure that your beneficiaries, such as your children and your partner, are financially covered in the event of your death or long-term inability to work.

Always remember to update your beneficiaries on your life insurance policy when there is a new member in the family.

  • DRAW UP A WILL

Having a will ensures that your estate is divided according to your wishes, but most importantly, as a parent, having a will ensures that you get to choose a guardian for your minor children in the event of your death.

You can opt for the “DIY” approach but I would recommend drawing up a will with a professional instead – either with your bank or a lawyer.

  • RETIREMENT

It can feel overwhelming going through the list of all the things you need to do to prepare financially for a new addition to the family. However, it is important to also look at the bigger picture and not neglect your retirement savings.

Don’t put off saving for your retirement. If you do have a retirement fund (pension/provident fund or a retirement annuity), remember to update your beneficiaries accordingly.

(Please note: your child is not your retirement plan!)

Again, having kids is an incredible experience but you need to plan as thoroughly as you can to ensure that having a baby does not put a financial strain on your finances.

*This article first appeared in City Press

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Woman & Finance by Mapalo - 1M ago

If you battle with budgeting, you are probably thinking: “ I’ve tried budgeting, it just doesn’t seem to work!” To tell you the truth, I have had my fair share of struggles with budgeting.

Let’s be frank, very few people get a kick out of creating a budget. But a budget is the cornerstone of a healthy financial life. A budget is telling your money where to go and what it should do. A budget puts you back in a position of power because you intentionally decide what you will spend your money on.

“A budget is telling your money where to go instead of wondering where it went.” – Dave Ramsey

Budgeting should be simple. Income less Expenses.

Tips around budgeting:

  1. Automate, Automate, Automate

Automating your budget allows you to operate on autopilot! It takes away the stress of having to remember who gets paid when, how much etc, but more importantly, automating your budget allows you to save and invest diligently.

I cannot tell you how many times I have said to myself “this month, after having paid all my other expenses, I will put away R1,000 into a saving or an investment” but never do!

Automating your investments specifically, makes them a priority and not just an afterthought you have when everything else has been ticked off the long list of expenses.

  1. Use the envelop system for miscellaneous expenses

The envelope system is a method of budgeting in which you put money meant for different categories in different envelopes. The point of using envelopes is two-fold: one, there is something powerful when you spend physical cash and not just swipe plastic i.e. your cheque or credit card, and two, because the money is categorized and you know exactly how much you have earmarked for spending, say on entertainment, once the envelope is empty, you know that you have no more money for that category.

The envelope method just makes money that more tangible.

Although it is one of the best ways to budget, it is not practical for large expenses like your bond, car payment etc (these expenses are better off automated), it is ideal for smaller expenses like groceries, entertainment and miscellaneous kids’ needs.

If having multiple envelopes sounds ancient or you are worried of carrying cash around, you can use multiple bank accounts to do the same; each account for a different purpose. You will just need to watch out for bank fees here!

I personally use the envelope system for my entertainment and eating out, it works brilliantly for me because my eating out spending was getting out of hand. Seeing the money getting thinner and thinner in the envelope is sobering. I even ask my family and friends to come join me at my house for lunch or dinner instead of going out when my envelope starts to run low!

  1. Use budgeting apps

Budgeting apps are a great way to keep track of how much you are spending and can quickly alert you when you need to cut back. One such app is 22seven (www.22seven.com)

You can easily download it on your app store.

  1. Use the 50/30/20 Budgeting rule

The 50/30/20 budgeting rule of thumb is a guideline to how you should split your income effectively and it focuses on three main categories: Needs, Wants, and Savings.

Categorize your budget into:

STEP 1 – NEEDS

Housing (Bond/rent)

Water & Lights and services

Car repayments/Transport

Groceries

‘Family tax’

Medical aid etc.

You first have to differentiate between which expenses are wants and needs, then allocate 50% of your after-tax income to your needs.

STEP 2 – WANTS

Dining out

Holidays

Shopping

Hobbies etc.

You then look at your wants and allocate 30% towards those. I am often entertained when people draw their budgets. Oftentimes we underestimate just how much of our money goes to wants. People convince themselves that they don’t spend so much on wants when in fact, it makes a big chunk of their expenditure.

It might not be large sums of money. The coffee in the morning, dining out with friends here and there, the gym membership you hardly use etc. it all adds up!

STEP 3 – SAVINGS

Then your savings, investment and paying off debt should at least account for 20% of your budget.

This allocation says a lot about debt, it shows that ideally, consumer debt should not even be part of the equation, thereby leaving you with more money towards your savings and investments.

Let’s look at an example:

Say your after-tax income is R20,000, this means that 50%(R10,000) will be your needs; 30% (R6,000) will go towards your needs and lastly 20% (R4,000) for your savings, investments and paying off debt.

There is something powerful when you budget this way, using percentages and not just the Rand amounts. If you think of it, say, looking at a grocery bill or car repayment of R2,000 and R4,500 respectively, doesn’t quite hit home. Because in relation to the bigger picture which is your income, what is the percentage?

Now in our example, of the 50% that is meant for needs, it would mean you are 35% away from reaching the limit! (R6,500/R10,000).

Looking at your budget in terms of percentages can be more sobering.

It also allows you to see where the chunk of your money is going. This quickly informs you where you can cut back and have the biggest impact on your overall finances. Think of it as focusing on the big wins vs. not buying your daily dose of coffee on your way to work type of cutting back.

Remember also that for a budget to work, it has to become part of your lifestyle, not just something you do once in a while!

Happy budgeting!

*This article first appeared in City Press

Step by step: How to build an emergency fund

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Part of a sound financial plan must include an emergency fund, because without it, your financial plan can be derailed should an emergency arise. An emergency fund is an account where money is set aside for any unexpected events of life. These events can be stressful and costly.

A tyre burst, paying medical bills that were not covered by your medical aid, losing a job, paying for the funeral of a family member who did not have a funeral benefit or not getting paid on time as a freelancer are just some of the events that can catch you by surprise, and if you don’t have an emergency fund, it is easy to turn to personal loans, credit cards and overdraft. While these may provide a short-term solution, the long-term effects of them are too costly i.e. high-interest rates of borrowing.

How much you should have in your emergency fund is dependent on your personal circumstances but it is recommended that it should be able to cover least six months worth of your living expenses.

If your living expenses are R10,000, it means that you should have R60,000 in your emergency account. This means that you need to know exactly how much money it costs to run your life every month, and you can only know that by budgeting.

To save for an emergency fund, you need to set a goal for yourself: how much do you wish to accumulate in the fund? Then come up with an action plan on how you will build up your emergency fund:

  1. You can save a fixed amount every month; whether this is R500 or R5,000, let it be an amount that works for you
  2. If you are a freelancer or earn on commission, perhaps a more practical approach would be to save a percentage of your income
  3. One of the quickest ways to beef up your emergency fund is through a cash windfall; you could save a percentage of your bonus or even a tax refund.

The best and most efficient way to ensure that you do save for an emergency fund is to automate your savings. This could mean setting up a monthly debit order until you reach your emergency fund goal.

What kind of account to use for an emergency fund?

An emergency fund is just another form of a savings account. It is money set aside for future consumption and is readily available. Because an emergency is an event that can happen at any time, the fund needs to be liquid, meaning it should be accessible with little to no risk of losing money and it must not carry expensive penalties. This can simply be a different bank account from your normal transactional account or a money market fund, both of which are for the short-term, for example, a 7-day notice or a 32-day notice. Just make sure that the chosen bank account can at least give you an interest rate on par with CPI of 4.5%, or better yet, one that beats inflation. So do not be afraid to shop around the different banks for a decent interest rate.

An alternative to saving in a normal bank account or in a money market account is to stash your money into your access bond. By putting extra money into your bond, the interest you pay on your bond is reduced, but the access facility means that the excess funds are available for you to withdraw should an emergency arise.

For this option, you will need to know what type of bond you have; is it an access bond or not? If you do not have an access bond but need to access the money that you have paid into your home loan, you need to apply to your bank to do this.

I would suggest that you check which type of bond you have with your bank even before you start saving for an emergency fund in your bond.

Emergency fund takeaway:

  • To reach your goal, you need to automate your emergency savings
  • The emergency fund needs to be liquid, meaning it is easy to access and you will not lose money.

An emergency fund does not only provide a financial buffer for the unexpected events of life, but it also prevents the debt-trap or debt-dependency. Having an emergency fund allows you to plan for the future without being scared of what might happen. It puts you back in the driver’s seat knowing that if a financially demanding event happens, you and your family are covered.

Tribe, do you have an emergency fund? How did you build it up?

This article first appeared in City Press

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Woman & Finance by Mapalo - 2M ago

Last week, I did a radio interview on how to deal with financially abusive relationships, and I realized that a majority of people get into relationships but hardly ever talk about how they will manage their finances as a unit.

From the time you say ‘yes’, the next question should be what marriage contract will you enter into. Unfortunately, many couples don’t discuss all the options available to them.

I think it’s difficult to have this type of conversation because essentially, it means you need to talk about money and the dissolution of marriage and no one wants to talk the possibility of a marriage ending even before it starts!

I remember going for pre-marital counselling at our church and my priest telling us that we ought to get married in community of property and to speed up the process, we lied and said we will be getting married in community of property! Bless his soul, but my husband and I had talked through all the options and the best one for us was out of community of property. Priests are not financial experts so rather get good advice about the most important contract you will ever sign.

So, before you walk down the aisle, you have to discuss which option suits the both of you best. Here are the types of contracts you can choose from:

TYPES OF MATRIMONIAL PROPERTY SYSTEMS

In community of property – this is a default matrimonial property system in South Africa, which applies when a couple getting married does not choose to conclude an ante-nuptial contract. This is a system where all assets and liabilities of either spouse, acquired before and after the marriage falls completely in the joint estate and the spouses own assets in equal undivided shares and are equally liable for all their debts and liabilities.

Therefore, each spouse has equal management of the joint estate, although consent might be needed by a spouse to enter into certain transactions.

Out of community of property – firstly, to be married in terms of this system one needs to conclude an ante-nuptial contract (known as an “ANC”) in the presence of a notary public prior to entering into the marriage.

The ANC will then have to be registered in the office of the registrar of deeds within three months of conclusion thereof. This system offers two options, namely, with or without the accrual system.

Note that if you do not conclude an ANC, bringing it up on the day when you sign with Home Affairs is too late.

Out of community of property without the accrual system – in terms of this system, the spouses retain all their assets and liabilities acquired before the marriage and will also remain the sole owners of any assets acquired after the conclusion of the marriage and remain liable for all debts acquired after the conclusion of the marriage.

 

Out of community of property with accrual system – this system is essentially similar to a marriage in community of property without the accrual system. The difference becomes noticeable only upon death or divorce. In this system the parties must elect an initial value of their assets as at commencement of their marriage which value will be recorded in the ANC as such. The value can be the actual value of assets/estimated or the spouses can elect to commence with a nil balance of their assets. Upon the dissolution of the marriage, a new calculation of the value of the assets will be made and the commencement value will then be subtracted from this value. The estate with the higher accrual must then pay over half the difference of the net accrual of each estate to the estate with the lesser accrual, unless otherwise provided for in the Antenuptial Contract.

Example:

Mpho’s estate has a commencement value of R200 000 and Jabu’s estate has a commencement value of R100 000. At the dissolution of the marriage, Mpho’s estate has increased in value to R300 000 and Jabu’s estate is R 400 000.

Mpho’s estate has accrued by R100 000 (R300 000 less R200 000) and Jabu’s estate by R300 000 (R400 000 less R100 000). The difference between the two accruals is R200 000 (R300 000 less R100 000). The estate with the higher accrual, Jabu’s, must then pay half the difference, R100 000 (R200 000/2), to the estate with the lesser accrual, Mpho’s. The net effect will then be that both Mpho and Jabu’s estates will have increased by R200 000.

The options are available; look at both the advantages and disadvantages of each and choose what works for you.

Tribe, what contract did you go with and why? 

This article first appeared in City Press.

The post Marriage & Money appeared first on Woman & Finance.

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Missed our previous podcasts?

Take a listen below, I have included the most listed to podcasts from the previous weeks.

  1. Why it takes forever to reduce your home loan, Maya Fisher-French and I discuss why that extra R500 into your home loan makes such a big difference and why you should start saving for your kids’ education.

Today’s podcast:

2. Why your marriage contract could see you responsible for your partner’s pre-marriage debt. Maya Fisher-French and I discuss the ins and outs of marriage contracts and what it takes to be a millionaire within five years

3. You want to start paying off your debt but just don’t know where to start? Maya Fisher-French and I provide a step by step guide. To join the conversation send us a voice note to 064 554 3959.

The post My Money, My Lifestyle Podcast:Why it takes forever to reduce your home loan appeared first on Woman & Finance.

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Black Tax: When a young person shares their income not only with their immediate family but with extended family as well, this means that they financially support their own kids, their parents and oftentimes aunts and cousins as well. It is the sandwich generation.

In my personal experience, black tax has not been burdensome, I give my parents money from time to time to help out with just a few things. My oldest sister might have a different recollection! Although my parents are mostly self-sufficient, I know my sister helped out a lot while all of us, her siblings were in University. Something I know she is proud of.

Having interviewed many people for my upcoming book on the topic of black tax, majority said they were proud that they could help their families to move forward i.e. send their siblings to school, that even though it put a lot of strain on their finances, they would do it again in a heartbeat.

Now, what is the other unspoken side of black tax? A month ago, I got a call from a young professional who was in a dilemma. He told me his story: he’s single, owns a property that he rents out in Johannesburg while he works in PE. He wants to either start investing in the stock market or purchase a second property that he will also rent out. Now, his dilemma is this: his father wants him to buy a car.

He lives 10-minutes walking distance away from work in PE and does not need a car. His father wants him to buy a car because when he visits home, he doesn’t have anything tangible to show that his son is ‘successful’, hence the request for him to buy a car.

Another example, a year ago in a coaching session, a client said she was finally getting out of revolving debt and started making her finances a priority, when I met her, she had already done a lot of mental work and had come up with a plan to pay off her debts. The next decision she wanted to take was to downgrade her car to a smaller, more cost-effective one. Her mother said to her: “you have already downgraded on so many things, why do you have to embarrass us by getting a smaller car!”

This made me realise that there is a lot of expectation of ‘success’ coming from parents, what their children drive, where they live etc. And it does not matter at what cost this success comes.

Having spoken to Dr. Ingrid Artus, a counselling psychologist, she says people normally operate from either an internal locus of control or external locus of control.

External locus of control says: I am respected and liked because of where I live, what I drive, where I am seen hanging out etc. validation of success comes from the outside.

Internal locus of control on the other hand, says: I am worthy with or without ‘things’. And unfortunately a lot more people and parents operate from an external locus of control, as seen in the two examples above.

Another example of Black Tax that is not spoken of is the (financial) abuse. In another coaching session, a client told me she was in a financial mess. She lived at home with her mom and siblings to cut costs of having to support two households. The siblings had finished school but did not want to work, and so she kept on dishing out money.

So, how does one deal with black tax?

  1. Communicate

There are a lot of unspoken expectations when it comes to family and money. Having candid conversations about your finances can help your family know what it is you can and can’t do for them.

  1. Set boundaries

 Boundaries are important in any relationship. Boundaries set the basic guidelines on how you will be treated. Set boundaries with your family to say, for example, unless it is unexpected expenses with school, you will not be giving out any extra money.

  1. Have a budget and stick to it

Let everyone involved know the budget for each month. If it is R3,000 or R5,000 per month. That is it. Teach them how to budget and live within what you provide.

  1. Think about ad hoc expenses

 We often underestimate our expenses, by far as 30%! We tend to think about the obvious i.e. fixed expenses and groceries, but we tend to forget the birthday gifts, wedding presents or unexpectedly having to buy new tyres etc. Even when you have set boundaries, unfortunately there will still be expenses that come up and are beyond their control.

Try to put a small amount away every month to cover such costs.

 

  1. Another source of income

Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.

Encourage your family members to use their skills to start enterprising; one might be good at baking. Ask them to start baking to sell the cookies from the house. Use social media to your advantage by advertising on it, for example. You can also look into their different hobbies and see if you can help them start a business from those.

Black tax needn’t be a burden. Helping your family is something to be proud of but you need to manage it well to ensure your financial success and ultimately, theirs too.

Tribe, what’s your experience with ‘black tax’?

The post The Dark Side of Black Tax appeared first on Woman & Finance.

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 I often chuckle at headlines like ‘self-made multimillionaire’ because there aren’t really ‘self-made’ millionaires or billionaires. Sure, as an entrepreneur, you do most of the grinding by yourself until you hire the right people. But so many people help you along the way, from the support of your family to people who buy into your idea; for you to succeed as an entrepreneur, you need a lot of cheering and support along the way.

So these are some of the lessons I’ve learned so far:

  • Entrepreneurship is not for the faint-hearted. When the going gets tough, because it will, you need to remember why you started.
  • You will need all the support you can get. This might be from family, friends, mentors and even your customers.
  • When starting a business, you might have a good idea of what service or product you will provide but 7/10 times, you will adjust your offering or how you offer it based on the feedback you are getting from your clients. So don’t be rigid.
  • Don’t be afraid of failure! I think its human nature to want to do the tried and tested method because there’s a level of safety in it. We know that it worked before and we think it will continue to work, but I have found that you can never grow if you don’t expand yourself.
  • They say it takes a village to raise a child, and I think it takes an entire tribe (family, friends, mentors etc) to become a thriving entrepreneur. Learn to lean in on your support system.
  • Have fun! Celebrate the small and the big wins.

Will you celebrate your journey as an entrepreneur by entering the 2019 EOY Awards? Do so on www.eoy.co.za

 

#entrepreneurshipisnojoke #celebrateentrepreneurship #EOY2019

The post The greatest lessons I’ve learned about entrepreneurship. appeared first on Woman & Finance.

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My journey as an entrepreneur started about 2 and a half years ago, after having worked for an employee benefits company for almost 5 years!

I had always known that I would not be employed by someone forever but I had no clue how or when I would become a full-time businesswoman.

In 2016 I decided to start blogging about personal finance because I wanted to bring a young voice to the topic of money. Every time I would Google things like ‘how to invest’ etc. I’d be bombarded with American content and I wanted to change that.

From my passion of educating people my age about money, it gradually turned into a business; talk about turning passion into paper!

Don’t be fooled, the paper just doesn’t start rolling in from the get-go. I remember some months where I wouldn’t make enough money to cover all my bills but I kept on grinding, I didn’t lose heart.

Entrepreneurship is no joke guys! It can be rough, but knowing your ‘why’ will keep you in business.

There are so many lessons I have learned along the way so far but two stand out for me:

  • It’s OK to say: “I don’t know; let me get back to you on that!” I think as an ‘expert’ in any area, you don’t want to be seen as not knowing enough but I’ve realized that even people with more years of experience than me don’t know everything!
  • Have the tough conversations early on. From negotiating contract terms and fee, have the conversation from the beginning.

It’s like admin, I don’t like doing it but I know it needs to be done for my business to run successfully, so I get admin done first before I do what excites me. By getting the admin out of the way, I know I have eliminated the stress and an uncomfortable situation knowing it would have to be done later.

Hehehehh, I still remember when companies would want to pay me for ‘exposure’ and not in Rands! Sure, in the beginning you need to pay school fees but eventually, you realise what you bring to the table and you charge the right price for your services.

But the most exciting thing about the whole entrepreneurship journey for me has been seeing myself grow in confidence and knowledge, and really just realizing how much I love what I do and to get paid for it is amazing!

The 4 things I’ve learned so far:

  • Keep on learning

Continuous learning is so important, especially if you are providing content. Your audience needs informative and relatable information, and you can only give them that through learning first.

  • Be kind to yourself

I think a lot of us are very hard on ourselves. For example, if I do a podcast or interview and at the end I feel like it didn’t go well, I would go over and over what I should have said or not said etc. But that’s useless! You can only really work on being your best for the next one. Learn from your mistakes and move on!

 

  • Feel the fear and do it anyway!

For you to become fearless, you have to do the things you are scared of. I know so many people who are talented but never go after their dreams because they are fearful. I say fake it till you make it!

Some people wait for things to be perfect to start a blog or YouTube channel or their business, they wait to have the right clothes, camera, business plan etc. and that never happens. I think its just fear.

GaryV says that people mask their insecurities by saying they want things to be perfect first before they can start!

  • Collaborate

There is enough for all of us to shine. Don’t be afraid to collaborate with people doing similar work.

  • Don’t give up: Show up ALWAYS.

My friends and family know this about me. I always show up. Even when I am fearful or don’t have experience, I show up, no matter what. My motto is: I’ll figure it out; Beyoncé didn’t happen overnight!

What’s your story? Celebrate your journey by entering the EOY Awards on www.eoy.co.za

#celebrateentrepreneurship #entrepreneurshipisnojoke #eoyawards

The post Things I wish I knew about Entrepreneurship. appeared first on Woman & Finance.

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