Strategies to Boost Year-End Savings

By Michelle Bester CFP®

 

Boosting your year-end savings can be a great way to end the year on a strong financial foot. Here are some effective strategies to help you maximise your savings.

 

1. Pay yourself first

“Always pay yourself first” is a popular financial principle that emphasises the importance of prioritising your savings and investments before spending on other expenses. This approach helps ensure that you are consistently building your financial security and working towards your long-term goals. You can follow this principle by setting up recurring payments or debit orders from your primary bank account to your Discretionary Investments and Retirement Funds.  This ensures that a portion of your income is saved before you have a chance to spend it.

 

2. Cut Unnecessary Expenses

Review your monthly expenses and identify areas where you can cut back. Cancel unused subscriptions, dine out less, and look for cheaper alternatives for regular purchases.

 

3. Maximise Investments with a Tax Benefit

Contribute to investments like Retirement funds (Retirement Annuities, Pension Funds & Provident Funds) and Tax-Free Savings Accounts.

The tax advantages include:

• Tax Deductions: Contributions to retirement funds such as a Pension, Provident, or Retirement Annuity (RA) fund are tax-deductible. In South Africa, you can deduct up to 27.5% of your taxable income, capped at R350,000 per annum.

• Tax-free Growth: The money you contribute to Retirement funds grows tax-free until you withdraw it. This means you don’t pay taxes on the investment gains each year.

• Tax-exemptions: A Tax-Free Savings Account (TFSA) is completely exempt from income tax and capital gains tax, if you stay within the maximum contribution of R36,000 per year. Retirement funds on the other hand are exempt from Estate duty, Executor fees (when beneficiaries are nominated) and Creditors.

 

4. Take Advantage of Year-End Bonuses

If you receive a year-end bonus, consider saving a significant portion of it. Directing this extra income into your savings can give you a substantial boost.

 

5. Sell Unused Items

Declutter your home and sell items you no longer need.

 

6. Review and Adjust Your Budget

Take a close look at your budget and adjust it to prioritise savings. Allocate more funds towards savings goals and less towards discretionary spending.

 

7. Plan for Big Expenses

If you know you have big expenses coming up like the upcoming Festive season, plan for them in advance. Setting aside money each month for these expenses can prevent you from dipping into your savings or buying on your credit card.

 

8. Take Advantage of Discounts and Sales

During the holiday season, look for discounts and sales on items you need.

 

9. Review Insurance Policies

Check your insurance policies to ensure you’re not over insured or overpaying. Shop around for better rates and consider contributing premium savings to your investment portfolio.

 

10. Increase Your Income:

Consider side or freelance work to boost your income. The extra money can go directly into your savings.

Implementing these strategies can help you boost your year-end savings and set you up for financial success in the coming year.

 

Read more about Ascor® Financial Planning Services

 

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