Help and advice for a complete novice.

[atown]

Hi, all!!

27F humbly asking for help and recommendations on where and how to save some money.
I’m a complete novice and I’m trying to be more savvy with my finances and budgets, etc. I’m looking for something like YouTube channels, articles, applications that can teach me the basics of saving and budgeting properly.

Some Context:
I’ve got an account with FNB and Capitec. My main and primary account is FNB, and Capitec is for family and friends basics. With FNB, I have about R100k in the 32 day notice account - brings in a few hundred every month and I try and send more into it whenever I can. FNB account fee is R370 monthly. I want to close this one and just use Capitec - good or bad idea?
FNB has eBucks and Capitec has the “live better” rewards system. Capitec account fee is about R10 a month.
I was thinking of keeping the 32 day account on FNB but move over everything to Capitec and open a savings account with Capitec as well.

Because of you guys, I changed my car insurance and medical aid; saving about R800 in total with Naked and Discovery.

I have no kids, and my biggest responsibility right now is my car (5600 monthly) and Black Tax - I help take care of two households and I’m living at home and don’t pay rent. After all my bills and whatnot, I aim for a minimum of R5k for saving that I put into the 32 day account.

I’ve seen you guys talk about TFSAs, EFTs, RA equities and I have absolutely no idea what those are (please don’t laugh at my pain ). I want to learn. Please point me in the right direction. Give me your best recommendations on where I can get more information and make better choices with my small little beaucoup bucks.

I’m based in Durban and looking for any apps that will give me points/rewards or coupons, etc. Like Checkers, Woolies, V+, eBucks, Clicks, etc.

Thank you all so much for your assistance. Have an awesome weekend

 

[chrisgirl87]

@atown Check out Money Marx on YouTube. He has series about investing by means of TFSA’s, RA’s etc. And is all within the context of South Africa.

 

[atown]

@chrisgirl87 Will do. Thank you

 

[bobbilynn]

@chrisgirl87 Yeah I did a crash course by binging his videos.

 

[drew21pa]

@atown Sam Beckbessinger's book "Manage your money like a f*cking grownup" is an excellent place to start. South African context and written for beginners (but never treats you like a child).

 

[bskicrash1]

@drew21pa Brilliant book.

 

[suz85]

@drew21pa I was just about to comment this, read it a few years ago. She's released another book providing financial advice for teens too.

 

[atown]

@drew21pa Will look it up now. Thank you

 

[chucklemethis]

@atown As someone has already stated, look into Money Marx on YouTube. I also recommend reading Nicolette Mashile’s book ‘What’s your move’, it’s a really good South African context financial book that also discusses black tax in addition to breaking down ETFs, TFSAs, etc

 

[atown]

@chucklemethis Thank you so much for your help. Appreciate it

 

[antony32]

@atown First thing I would do is pay off your car. That's a high amount to pay monthly on a depreciating asset with a high interest rate.

Capitec is cheaper and you are paying alot for you FNB account.

If you do decide to stay with FNB then:
- Downgrade your account. You don't need an account that costs so much. I am on the premier bundle and it costs about R250 max
- I keep my emergency fund (6 months expenses) in FNB Maximiser account which gives 8.25% interest returns at the moment.
- Keep your fixed deposit but maybe see whats the best 12 month interest rate you can get. I currently have an absa fixed deposit that gives me over 9% return.

Open a tax free account and maximise your annual contributions (R36,000 per year). There are many options here (easy equities, banks etc)

To dip your toes into further investing I would advise starting with ETFs on easy equities.

 

[bobbilynn]

@atown Try the Franc App. The app has the same questions an advisor would ask you in order to put you on the right path to investing against your goals. I invest there.

It all depends on your goals and how much you have to save.
There are lots of posts in this sub that answer your question. But only you know you. So try the app but go to their website as their make it easy to understand with simple language.

I also save on Sygnia, but Franc is good for a beginner.

 

[spiritualchristian7]

@atown I find Simon Brown's blog very useful
https://justonelap.com/webinar/

 

[littlejoshua]

@atown If this helps at all, Capitec will be launching a 7 and 32 day notice account soon

 

[cellosandwolves]

@atown Credit card cash back options

If you can be disciplined about your credit spending, i.e. use your credit card for all your monthly expenses but pay it back in full at the end of each month, you can take advantage of a couple of credit card cash back options. If you can't guarantee that you'll keep your account in good standing, don't go down this path at all. The downside of ongoing credit card debt is way larger than the upside of the rewards.

There are two basic approaches:

1. Prioritise the lowest fees and then try get the best rewards
2. Prioritise the highest net rewards

The choice between these options really depends on your financial situation. 1. is the more conservative option, while 2. will be better suited to you if you are a higher earner and spender. Let's start with 1.

You've mentioned Capitec's "Live Better", with 1% back on your qualifying monthly credit card spend. This is a good low-cost option. You can do better with two alternatives:

1. Sanlam Money Saver credit card R60 monthly card fee. Gives you 2.5% back on your monthly qualifying (e.g. EFT's don't count) credit card spend, provided you are able to match the amount with another 2.5% contribution. The 5% goes into a good Easy Equities unit trust and is paid out as cash quarterly. Also, R1 back per litre of fuel at TotalEnergies. 5% back on spend at partners (Dischem, Baby City, a couple of others)
2. Woolworth's credit card Gold card- R60 monthly card fee. 2% back in quarterly Woolies vouchers on all Woolies puchases. 0.75% back in quarterly Woolies vouchers on all purchases outside of Woolies. If you qualify for the Black card (earn R41 666+ pm), then these percentages go up to 3% and 1%, with a monthly fee of R69.

If you want to prioritise the highest net rewards, Discovery Bank and eBucks can earn a lot. But you have to jump through hoops, be in a good financial position, and spend quite a lot (say R12500 monthly on the card at least). I use and can unpack the Discovery option, but it's quite a big learning curve and monthly fees jump up to R200 (without Vitality) - R500 (with Vitality).

Long-term investment

This one is easy. You should absolutely be investing what you can for the long-term (10 year + time horizon). If you can, max out your TFSA contribution (R36k / year) in a TFSA account on Easy Equities. A simple, low cost option is the Satrix S&P 500 ETF. It's also a hedge against depreciation of the Rand, which is a good idea long-term if all your other assets are Rand-denominated. You can use a global index ETF to be a bit more conservative. You want to maximise your equity exposure for long-term growth.

The mindset you should have for money invested in your TFSA is that you're not going to touch it for 20 years. The upside if you can stick to this is huge! Your money will likely grow at ~ 8% p.a., tax-free.

If you're going to need this money sooner, then keep it out of your TFSA. Once you take it out, you can't put it back in (i.e. you've permanently lost a chunk of your lifetime R500k contribution limit), and you lose the benefits of tax-free accumulation. If you have a 5 year time horizon, for instance, consider regular ZAR account low-cost global equity index ETF's on Easy Equities.

Short-term investment

For low-cost short-term investments, Tyme Bank is a great option. Their 3, 6 and 12 month fixed deposits are best-in-class (8%, 9% and 10% effective p.a.). They also give up to 11% interest on a 10-day notice account. They have no monthly account fee. This is what I would use for my short-term savings.

Budgeting

Absolutely do a monthly budget. 22Seven is a great, free South African option that I use. Apps can track expenses mostly automatically, so you have no excuse to not know what's going on with your expenses. The gap between your income and expenses is your future freedom Treat it as a long-term project.

All the best on your journey!

 

[kukikumar64]

@atown There’s good advice everywhere here but just want to say great job getting to where you at. Not easy to save while supporting family.

 

[suz85]

@atown Is the R5600 going towards paying off a car loan? If so, what is the oustanding balance?

 

[atown]

@suz85 80k left. It’s with Wesbank and this should be my last year.

 

[suz85]

@atown If it were me, I'd take money out of the savings and pay the car off. Ask for a settlement quote, sometimes it's a few grand less than the outstanding balance.

Should you decide to settle the loan, that R5600 that you're currently spending can be sent to your 32 notice account monthly as savings. Automate that it gets transferred into the account every month so that you aren't tempted to spend it.

You say that you also aim to save around 5K monthly as well? Well, if you settle your car you'd be able to put away around R10 600 in savings monthly which would help in recouping savings spent on the settlement.

Being around 80K, it would take around 8 months to get your savings back to where it was. That's less time than what is currently on your loan agreement.

But, personally this is just what I would do. Eliminate your biggest debts first.

As someone mentioned, Beck Bessinger wrote a book called "Manage your money like a fuc*ing grown up". It really is a good book that gives practical financial advice.

You can find it on Takealot https://www.takealot.com/manage-your-money-like-a-f-cking-grown-up/PLID48608525

 

[leofelix]

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