Homeowner tip: Budgeting for One

The following information was gathered from the Business Report and written by a Staff Reporter. (18/03/2025) Always remember that these tips are only guidelines. Some may work for you, others won’t; depending on your income and situation. Therefore, it is important to speak to a financial advisor before you implement it.

You can read the entire article here: 

 The article highlights how South Africans can start investing, even with limited income. Here are the important points:

1. Start Small and Be Consistent – Many believe they need significant capital to invest, but even small, regular contributions can grow over time due to compounding returns.

2. Prioritize Saving Overspending – Financial expert Haydn Johns emphasizes that many people have a spending problem, not an income problem. Building the habit of saving first helps secure funds for investment.

3. Leverage Salary Increases – Before adjusting your lifestyle after a raise, consider allocating part of it to a monthly investment.

4. Create a Budget – Identifying unnecessary expenses can free up money for investments. A target of 15-20% of gross monthly income is ideal, but starting with any amount is key.

5. Build a Reserve Fund – Having at least three months' worth of expenses in a liquid investment helps with unexpected financial needs.

6. Use Tax-Efficient Investment Options – Maximizing retirement fund contributions and tax-free investments can enhance returns.

7. Choose the Right Investment Structure – Younger investors should favour funds with higher equity allocation to maximize long-term returns.

Structured plan for implementing the investment strategies mentioned in the article:

Step-by-Step Investment Plan for South Africans with Limited Income

Please download the informational poster for future reference. 

1. Start Small and Stay Consistent

- Begin with an affordable amount, even R100–R500 per month.

- Automate contributions to ensure consistency.

- Reinvest dividends and returns for long-term compounding.

2. Adjust Spending Habits

- Track expenses and identify non-essential costs.

- Adopt a "save first, spend later" mindset.

- Redirect any saved funds toward investments.

3. Allocate Salary Increases Strategically

- Before upgrading your lifestyle, dedicate a portion of salary increments to investments.

- Increase investment contributions proportionally to earnings.

4. Create a Realistic Budget

- Aim to allocate 15–20% of gross monthly income for investments.

- If that’s too high, start with whatever is manageable and gradually increase.

5. Build a Safety Net

- Maintain an emergency reserve with at least 3 months’ worth of expenses.

- Keep funds accessible in a liquid investment for unforeseen costs.

6. Optimize Tax Benefits

- Maximize tax-free savings accounts (TFSA) and retirement contributions.

- Explore tax-efficient investment vehicles to enhance returns.

7. Choose the Right Investment Approach

- Younger investors should lean toward equity-heavy portfolios for long-term growth.

- Consider diversified mutual funds or ETFs with stable returns.