Teaching our children healthy financial habits.

Francois le Clus • October 7, 2024

Habits, as defined by the Oxford Dictionary, are “a settled or regular tendency or practice, especially one that is hard to give up.” Good habits can make a huge difference in how we live, and they often become second nature. Think about the simple act of closing the garage door when leaving for work—it’s automatic. Now, imagine if your financial habits could be just as effortless.

Building strong financial habits can make managing your money easier and improve your financial health. Successful investors follow key principles: they know how to save and invest, practice good habits, and steer clear of costly mistakes.

 

Take Control of Your Money

 

From childhood, allowances teach us the basics of money. Setting a budget for kids helps them make smart choices. If they spend their pocket money too quickly, they learn the value of saving and the importance of waiting for what they really want.

As we grow older, these early lessons shape our money habits as adults. Whether you’re paid weekly or annually, the first step to financial control is knowing the value of your income. A budget helps you make the most of what you have.

If you’re new to budgeting, start now. Don’t guess with your expenses—use one of the many budget templates available online. The key is building the habit of budgeting and sticking with it. Christine Benz from Morningstar has a great guide titled How to Assess Your Cash Flows and Create a Budget to help you get started.

 

Keep It Simple With Basic Financial Rules

 

The simpler your habits, the easier they are to maintain. For your finances, stick to these straightforward rules:

 

  • Spend less than you earn.
  • Pay yourself first (save), then spend what’s left.
  • Save for big purchases rather than using credit.
  • Pay off debt quickly.
  • Have an emergency fund.

 

 

Start Early—No Matter How Small

 

Some people think they need a lot of money to start investing, but even small amounts grow over time, thanks to compounding. The sooner you start saving and investing, the better. Even if it’s just a little, investing early sets you on a path to accumulate wealth over time.

Starting small helps you build the habit of saving, which can become one of your strongest financial tools. It’s better to start now with what you have than to wait and save larger sums later.

 

Time Is On Your Side

 

When it comes to investing, young people have an advantage—time. Even modest investments can grow significantly over time due to compounding.

For example, a 22-year-old who saves R200 a month at a 5% annual return could have over R362,000 by age 65. In comparison, someone who waits until 35 and saves R300 a month at 6% will have just over R300,000 by the same age. Those extra years make a big difference.

 

Understand the Power of Compounding

 

Money saved in your 20s and 30s has decades to grow. For instance, R1 growing at 6% annually becomes R10.30 in 40 years. The same R1 will only grow to R3.20 after 20 years. The earlier you start, the more your money will grow, reducing the amount you’ll need to save to reach your goals.

 

Teach the “Rule of 72”

 

A great way to explain the time value of money is the "Rule of 72." Divide 72 by the interest rate to see how many years it will take for your money to double. This concept helps people understand why starting early is so valuable—even small investments now are more beneficial than larger ones later.

 

Avoid Lifestyle Inflation

 

As your income increases, it’s tempting to spend more. While it’s okay to reward yourself for hard work, be careful not to let your spending grow faster than your savings. The more you spend, the more you’ll need to maintain that lifestyle in retirement.

A smarter approach is to live conservatively. By keeping your spending in check and avoiding unnecessary debt, you can save more while you’re working and create a more affordable lifestyle for retirement.

 

In Conclusion

 

The key to financial success is staying motivated and consistent. You’ll have setbacks, and that’s okay—just keep moving forward. Share your goals with your family to stay accountable, break your goals into small steps, and celebrate your progress along the way. With patience and dedication, you can build better financial habits and enjoy a more secure future.

SA Trusts can now distribute to offshore trusts

By PJ Botha • September 4, 2025
For a long time, the South African Reserve Bank (SARB) prohibited money from being transferred directly from local trusts to offshore trusts. You may have had offshore exposure in your local trust through asset swops and other investment vehicles, but if you want to distribute to overseas beneficiaries, you must first withdraw funds from the trust and then transfer to them through the SARB. This recently changed. SARS declared that beginning August 1, 2023, it will evaluate and possibly approve petitions to transfer funds from South African trusts to offshore trusts. This adjustment coincides with the South African Reserve Bank's (SARB) recent relaxation of several currency control regulations. While this new alternative provides numerous prospects, there are tight criteria and a thorough application process. If you are an investor or trustee, you must understand these requirements. There is certainly no one-size-fits-all answer, and the drawbacks and benefits should be examined while deciding. Drawbacks: 1. Complex Regulatory Requirements. • Strict compliance required: The procedure is extensive, necessitating meticulous documentation and adherence to both SARS and SARB regulations. • Long approval process: Each application is assessed individually, which can take weeks or even months. 2. Cost • Legal, tax, and accounting assistance can be costly. • Administrative burden: Extensive documentation and regular reporting increase management time and expenses. 3. Tax obligations • The South African trust must pay all relevant taxes (capital gains, dividends, etc.) before distribution, preventing tax deferral to the recipient. Money held in a trust is often taxed at a higher rate than money held in the name of a company or individual. 4. Uncertainty and Evolving Practice • New regulations may impact future distributions and compliance needs. • Disputes: Failure to meet SARS or SARB rules may result in delayed or refused distributions. Benefits: 1. Global Wealth Diversification. Offshore trusts may provide superior asset protection during political or economic volatility in South Africa. 2. Succession and Estate Planning • Multi-Jurisdictional Estate Planning: This allows families with members living in different countries to structure their affairs more efficiently. • Offshore trusts facilitate the transfer of money to beneficiaries outside South Africa, simplifying inheritance processes. 3. Tax preparation • Offshore trusts can optimise worldwide tax positions with proper preparation and professional counsel, but must follow all applicable requirements. 4. Regulatory Clarity • Official Approval: SARS and SARB now provide clear protocols for trustees and investors, eliminating legal risks. The ability to transfer money from a South African trust to an offshore trust is a useful tool for global estate and investment planning. Professional guidance is essential to maximise benefits and avoid pitfalls.

AFGETREDENES EN MEDIESE KOSTES

By Riaan Botha • September 4, 2025
’n Nuwe denke oor ouderdom. ‘n Positiewe benadering oor verouderdom word gevorm as gevolg van die ontwikkeling van tegnologie en die mediese wetenskap. Statistieke wys dat die mens langer neem om te verouder en op ’n hoër ouderdom afsterf. Met veroudering word nuwe perspektiewe oor verhoudings met familie en vriende gevorm. ’n Groter dringendheid bestaan om beplanning uit te voer. Daar is ’n besef dat die tyd aanstap en dat elke oomblik geniet moet word. Die gewoonte om uit te stel en eers later belangrike momente in jou lewe te wil ervaar, verander. Daar is ’n besef dat die liggaam verouder maar dat die innerlike self steeds wil vernuwe. Laasgenoemde kan aangehelp word deur positiewe denke en gewoontes soos om terug te gee aan die plaaslike gemeenskap, om kennis te deel deur om te skryf of om onderrig te gee. Daar kan selfs oorweeg word om ’n nuwe vaardigheid aan te leer. Een van ons kliente wat ’n afgetrede predikant is, het na aftrede begin om klavierlesse te neem terwyl ander persone ’n nuwe plaaslike taal aangeleer het. Mediese kostes  Volgens Stats SA se verslag “Profile of older persons in SA” wat in 2023 gepubliseer is, het die gedeelte van die SA bevolking wat ouer as 60 jaar is, verhoog van 7,0% in 1996 tot 9,8% in 2022. Wanneer die bevolking per groep ontleed word, maak die 60 jaar en ouer gedeelte van die betrokke groep die volgende uit: Blankes ongeveer 29%, Indiërs/Asiate 16,5%, Kleurlinge 10,9% en Swartes 7,8%. Hiervan gebruik ongeveer 50% kroniese medisyne, 20% gebruik brille, 10% dra gehoortoestelle en 5% is in rolstoele.Hierdie ondersteunende toestelle is duur en word nie altyd ten volle deur mediese fondse betaal nie. Die verslag noem ook dat meer as 50% van persone ouer as 60 leef in huishoudings wat uitgebreide families huisves. Mediese uitgawes is seker een van die belangrikste items in ’n afgetredene se begroting. Dit is ’n ongelukkige verskynsel dat mediese kostes met ouderdom verhoog. Die koste van ’n mediese fonds verhoog jaarliks met 3% tot 5% meer as die inflasiekoers en sal ’n al groter persentasie van ons persoonlike uitgawes vereis. Om die regte mediese fonds volgens persoonlike mediese kondisies te kies, speel ’n belangrike rol om deurlopende mediese uitgawes te beperk. Gap Cover kan ’n belangrike rol speel wanneer mediese fondsvoordele nie al die werklike mediese uitgawes dek nie. ’n Versekeringsproduk wat sal uitbetaal wanneer een van die gevreesde siekte opgedoen word, kan ook help om onverwagte mediese uitgawes te dek. RIAAN BOTHA