It’s back to school for millions of South African learners. But one of the biggest lessons they need to succeed in life - how to be smart with money - is taught at home, and the best time to start is right now.

In fact, the earlier you start talking to your children about money, the more likely they are to develop good money habits that will stand them in good stead for the rest of their lives, says Stian de Witt, who is the executive head of financial planning at NMG Benefits.

Research shows that the sooner children start learning to manage money, the better off they are as adults. A Cambridge University study suggests that by the age of 7, children can develop many of the basic financial behaviours they need in adult life.

“Building a strong financial foundation from a young age is critical. Even legendary investor Warren Buffett credits the early money lessons his parents taught him with setting him up for success. That’s why it’s so important that we help our kids build a healthy relationship with money from an early age,” said De Witt.

It’s never too early to start

Talking openly about money matters with your children will build their financial awareness. Include your children in conversations about your monthly budget, income and expenses from a young age. Show them how to prepare a budget. Get them to calculate the tip on a restaurant bill. Get them involved in choosing the best grocery items based on cost and quality. “These may seem like trivial tasks, but they all help make a child financially savvy from an early age,” said De Witt.

Teach your children to budget

Help your children set up a simple age-appropriate budget – maybe one third for spending, one third for saving and one third for giving, for example. Or open a savings account for them and deposit a portion of their pocket money into it every month. “When they start to see their money grow, they will start understanding the value of saving, compound interest and budgeting,” says De Witt.

Set a good example

It’s not enough to simply teach your children about money: their biggest influence is the way you discuss and handle money around them. “Children learn by watching you. It’s no use teaching them to budget the one day and then going on a shopping spree the next. You’ve got to show them what good financial habits look like,” says De Witt

Help your children earn money

Don’t just give your kids pocket money without requiring them to do something for it. The sooner they learn how hard it is to earn money, the sooner they will learn to be financially independent. Get them to wash the car or mow the lawn. And if they only complete two out of three chores, only pay them two-thirds of their pocket money - and explain why you’re cutting their pocket money.

For older children, packing grocery bags or working as a teller or a waiter doesn’t just teach money lessons. It teaches how to take instructions, work with others and handle workplace stress.

“Educating your children about money takes time – but it will instill good habits that will serve them well for the rest of their lives,” said De Witt.

Accommodation booked? Check. Car serviced. Check. Bags packed? Check. Security company notified? Check. You’re ready to roll. Now there’s just one thing left to do: make sure all your important insurance policies and documents are up to date and easily accessible.

It may seem like a pain when all you want to do is hit the road, but if something goes wrong, having all your documents in place could save you and your family time and money, says Stian de Witt, head of financial planning at NMG Benefits.

Update your car and home insurance

Bought a new TV or upgraded your laptop without updating your home insurance policy? Will a family member be driving your car while you’re on holiday? Make sure you’re covered for any eventuality this holiday season – and while you’re at it, check if your policies offer roadside assistance and travel insurance, and save those details on your phone.

Review your life insurance

Go through your life insurance policies documents before you go on vacation to make sure you know exactly what you’re covered for, what the exclusions are, and if your information is up to date. “The main reasons for life insurance claims being rejected are non-disclosure of valid information and unpaid premiums. Make sure your premiums go off correctly and your policy document is accurate,” says De Witt.

Get your beneficiary nomination forms done

According to law, you need a separate, up-to-date nomination of beneficiary form for each of your life and funeral policies. The same applies to your savings in your retirement fund. “If you haven’t submitted these forms or they’re outdated, any payouts can be delayed, or the benefits will be paid into your estate and be subject to estate duty tax,” said De Witt.

Check your medical aid and gap cover

This is a good time to review your medical aid plan and health insurance policies to make sure you know what you and your family are covered for. If you don’t have gap cover, consider it: it provides a financial safety net if you or a family member end up in hospital for an extended period. Most medical aids only pay out 100% of the medical aid rate, whereas most specialists charge between 100% and 200%. Nobody wants to come home to exorbitant medical bills.

Update your will

Is your will up to date and valid? It’s a small price to pay for the peace of mind it will give you as you enter the silly season. Many banks and financial services companies offer free wills to their customers, and they’re usually quick easy to compile.

Share your banking details

Always make sure your spouse or one of your children can access your bank accounts. If you’re not able to access your accounts for any reason, it could leave your family with no access to money when they need it most.

Speak to a professional financial advisor

If you need help getting all your important documents in place before you go on holiday, speak to a qualified and experienced financial advisor. They’ll help you make sure everything is in order for your vacation. Happy holidays!

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The NMG SA Group of Companies are authorised financial service providers t/a NMG Benefits

‘Tis the season to be jolly – but for many South African consumers, the holiday season also spells dark times for their finances, as they over-spend their budgets and create unwanted debts.

But it doesn’t have to be that way. By doing some smart planning now, you can have the December holiday you want without the New Year’s financial hangover.

Don’t fall into the Black Friday trap

Black Friday is one of the greatest budget breakers known to humankind. Don’t buy things you don’t really need, using money you don’t really have. Know what you need, compare prices and quality, and if you are going to buy something, make sure it is something that you really need. Don’t buy stuff just because it looks like a good deal.

Have a festive season budget

If you’re going to survive the festive season, you need a budget. List all your income and expenses, see how much you have left – and then plan how to spend that money carefully. Having a budget is key to taking control of your finances. It sets boundaries and tells you how much you have available. Just remember to add all your expenses – even the hidden ones like bank charges. That way you will minimise those unexpected surprises.

Shop with your head, not your heart

The festive season is an expensive time of the year. It’s not just Christmas gifts: it’s also school uniforms, stationery, and books. Don’t get swept away by the holiday spirit. Make realistic, rational financial decisions, and differentiate between your ‘wants’ and your ‘needs’.

Avoid the debt trap

Right now, it’s estimated that South Africans spend more than 80% of their incomes paying off debt, leaving only 20% to cover the rest of their household expenses. Once you are over-indebted, it is extremely difficult to get your head above water again. This happens so easily if you don’t monitor and track your income and expenses – especially during the festive season.

Speak to a professional financial advisor

In the healthcare industry, ‘early detection saves lives’. It’s the same in the financial world. Getting an early grip on your finances can save your financial well-being in the long run. Speaking to a qualified financial advisor can put everything into perspective. They can help you to set realistic long- and short-term financial goals so that you can experience true financial freedom.

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The NMG SA Group of Companies are authorised financial service providers t/a NMG Benefits

On Thursday October 22^nd during a media briefing the Financial Sector Conduct Authority (FSCA) through the Financial Advisory and Intermediary Services Act (FAIS), officially declared cryptocurrency as a financial product. The regulatory body has now indicated that crypto assets are regulated, and foreign exchange controls implemented. But what does this mean for your retirement fund portfolio? And broader your personal wealth portfolio?

The commissioner of the FSCA, Unathi Kamlana, assessed and justified the FSCA position, addressing why crypto assets need to be treated as financial products. Outlining that the cryptocurrency industry has been marketing their products very aggressively to the virtual consumer, without any oversight as to the quality of the product to the virtual client. Stating that the FSCA cannot allow for a situation in which cryptocurrency operates outside the regulatory framework, adding that it is neither ideal nor in the public’s best interest. Therefore, the statement that these are now financial products, does not in any way reduce the high levels of risk involved in crypto assets. With the new classification, the risk of these assets has not changed, therefore you are still vulnerable to a high possibility of loss.

The crypto market, since its introduction, has grown dramatically, and will continue in its growth trajectory, therefore the financial sector must be responsive and proactive to these changes. In its exponential growth, cryptocurrency has also seen a dramatic increase in scams and cybercrime. The aim of the declaration is to reduce the criminal activity that has impacted both individuals and businesses with the rise of cryptocurrency.

The FSCA declares and defines a crypto asset as a digital representation of value.

• Which is not issued by a centralised bank, however, can be traded, transferred, and stored electronically, by either and natural or legal person for the purpose of payment, investment, or forms of utility.
• This then applies to cryptographic techniques and,
• Uses distributed ledger technology.

The declaration is very specific to dealing with cryptocurrencies in the context of financial services, and further the services rendered in relation to crypto assets. However, this regulation does not indicate the following:

• Crypto assets are not legitimised assets
• Giving credence to crypto assets
• Crypto is still not recognised as legal tender

Noting that there has been a lot of allegations made against cryptocurrencies, in relation to fraud and crypto scams, this is further including other types of operational risks not only to businesses, but also to individuals with crypto assets. This is therefore a driving factor to the case of much needed regulatory intervention, and an all-encompassing comprehensive approach to regulation. Crypto assets are still in no way allowed in pension and regulated portfolios, as outlined they are yet to be legitimised assets. Pension and regulated portfolios may only operate with regulated legitamised assets as outlined by Collective Investment Schemes Control Act (CISCA).

What are the risks involved in virtual assets?

Under the new regulation, Crypto traders will need to get licensed, as the new regulation will enable the financial regulatory body to receive data, promote disclosure and at a foundational level understand the key risks in virtual asset business models.

A pivotal benefit to the licensing of Crypto traders is that the FSCA will be able to ask for information, to protect consumers. A preventative measure to reduce occurrences of both scams and cyber-crime. In the broader regulation of the industry, the FSCA has advised that consumers who both do and wish to participate in the crypto space must educate themselves around crypto trading. As the reality is that if you are in ownership of crypto assets, you will now need to declare these assets as a part of your portfolio reporting and financial planning.

It is a key point to remember that while crypto assets are now classified as financial products, they are still highly volatile and hold a high risk and high loss ratio, something to keep in mind before chasing a crypto asset investment.

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The NMG SA Group of Companies are authorised financial service providers t/a NMG Benefits

If you’re facing retrenchment, or have recently been retrenched, there are several steps you should take to ensure the best outcomes for your financial and personal future – and it starts with staying calm, understanding the process and knowing your rights, says employee benefits firm NMG.

By law, your employer must provide you with two key things: a notice of retrenchment, including the reason for the retrenchment, the alternatives your employer considered, and any proposed assistance; and a consultation, where you have the opportunity to discuss the retrenchments with the employer.

“People often underestimate the massive shock of retrenchment. Take a few days to process it. Don’t make any financial decisions when you are in an emotional frame of mind. After a few days, contact your financial adviser and discuss your options to make sure you don’t make rash decisions which will affect you down the line,” says NMG financial adviser Dieter Schmikl.

Know what to expect

You can expect to get the following from your employer on retrenchment:

• Your final salary (notice pay), including any outstanding leave.
• Severance pay, comprising one week’s remuneration for every year of service you have completed. Some companies may give more than this.
• Pro-rata bonus, depending on your contract.
• All the retirement savings you have in your company’s retirement fund.

“It is critical to speak to a qualified financial advisor. Your retrenchment package may be the last money you receive for a while. You need to make sure you manage it in the most effective way possible,” says Schmikl.

Know your options with your retirement savings

When you get retrenched you have four options with your retirement savings. You can:

• Transfer to another pension or provident fund
• Preserve your savings in a preservation fund or a retirement annuity
• Withdraw some of your money in cash and preserve the remaining amount, or
• Withdraw your money in cash.

“Think carefully about what you are going to do with your retirement savings. If you can, your best option is to keep your money invested for your retirement. If this is not possible, consider taking only a portion of your money as cash so that you can keep some money aside for retirement,” says Schmikl. “Taking all your money in cash should be your last consideration.”

Watch your spending

When people get retrenched, they often make bad spending decisions because they are emotional and not thinking clearly. This is the time to get ruthless with your budget, and cut back to the bare basics until you’re in a position where you’re earning again, says Schmikl.

Talk to a qualified financial advisor

Many people are nervous to speak to a financial advisor at this time because of the costs. The truth is that getting the advice of a professional advisor could save you a lot more money than any fees you would pay.

“One of the most important pieces of advice you can get is to try to stay positive. See the retrenchment as a new beginning and not a dead end. This is hard to do but a negative mindset will make anything you try to do difficult. Give yourself a set ‘mourning period’ where you allow yourself to feel all the negative emotions. But once that period is over, you need to move on, and move on with hope and renewed energy,” says Schmikl.

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T&Cs apply. The NMG SA Group of Companies are authorised financial services providers t/a NMG Benefits.

Times are tough – so if you’re one of the lucky ones to get a refund from the taxman, or a bonus from your employer, you may be tempted to splurge a little. But before you head off on that shopping spree, stop and breathe. Now is the time to be using any unexpected windfalls wisely to cushion yourself against any financial shocks.

We asked the head of financial planning at NMG Benefits, Stian de Witt, for his top tips on spending a tax pay-out wisely.

Reduce your debt

At a time when interest rates are soaring, any money you owe is becoming more expensive to service every month. A smart way to use your tax refund is to reduce your debt, starting with unsecured debts that generally attract the highest interest rates, like store cards, credit cards or personal loans, says De Witt. 

Bulk up your RA

If you take your tax pay-out and put it into your retirement annuity, you’re effectively setting yourself up to get another tax refund on you refund, as it were. At a 45% tax rate, you’ll get R4500 back next year on every R10000 you put into your RA now.

Create an emergency fund

Everybody should have an emergency fund for life’s little curveballs, says De Witt. “If you don’t have at least R15 000 sitting somewhere for when disaster strikes, this is a great way to use your tax pay-out. Your future self will thank you one day.”

Put your money to work

“I often suggest to my clients that they invest windfalls into vehicles like tax-free investments – note, not tax-free savings – or even unit trusts,” says De Witt. “Unlike tax-free savings, these types of investments will typically out-perform inflation every year, leaving you with a tidy nest-egg in the future.

Top up your pension fund at work

If your company’s pension fund allows it, putting money into this fund is always a solid investment in your retirement funds – and it’s cheaper than a RA, says De Witt.

Ultimately, any investments you make with your windfall should be part of a proper financial plan – and proper financial planning starts with setting goals. Good examples of short-term goals are setting up a budget, paying off debt and contributing towards an emergency fund. Medium-term goals could include setting up life, disability and funeral policies. Your long-term goals range from buying a house to financing your children’s education.

“And if you’re still not sure what to do with a windfall, speak to a financial adviser. A qualified advisor can help you save more money and grow your money faster. It’s important to find a financial advisor that can partner with you for life, someone who gets to know and understand your unique circumstances,” says De Witt.

South African consumers are under massive financial pressure right now – and things are going to get worse before they get better, with the World Bank’s latest Global Economic Prospects report warning of a global recession as fuel prices, inflation and the cost of living all increase sharply.

What this means is that many consumers may be tempted to dip into their retirement savings to help make ends meet. But that’s one of the worst things you could do to your finances, warns Nico Burger, Head of Financial Planning at employee benefits advisory firm NMG Benefits.

“We’re going through tough times, which may become tougher still. Eating into your savings today puts pressure on your savings for your future. Now is the time to put your spending habits under the microscope and learn to spend even more wisely than before,” says Burger.

Start by tracking your spending

Take your bank statement at the end of each month and go through each line item. Calculate how much you spend on your needs and your wants. After a few months of carefully unpacking your spending habits, you will be able to see where your ‘leaks’ are – and once you’ve found those, you can work to close them up. “Spending more wisely could mean something as simple as ordering less take-aways and eating at home instead,” says Burger.

Set your own ‘cool off’ periods – and stick to them

When you want to buy something that’s costly, give yourself a period to think about it before going ahead with the purchase. This may sound simple, but it’s effective with compulsive buyers. Buying compulsively doesn’t give you enough time to truly evaluate if you need the item or if you want it. “Compulsive buying also often leads to remorse because you haven’t done proper research. You may find a better quality product somewhere else at a discounted price,” says Burger.

Don’t reduce the amount you put away each month

The future is uncertain. You shouldn’t only be avoiding eating into your savings, but actually try to save more, is possible. “We’re in a period where saving and preserving our money is critical to our financial futures,” says Burger.

Preserve your retirement savings when changing jobs

The Association for Savings and Investment South Africa (Asisa) says a major reason for low savings is the fact that members take their savings in cash when changing jobs. See your retirement savings as just that: savings for when you retire one day. Cashing out when you change jobs will only jeopardise your financial future. You will also lose out on compound interest, where you earn interest on your interest.

Challenge yourself to cut your luxury spending

Each person has their own weaknesses. For the sport fanatic, it could be expensive running shoes; for the fashionista, branded clothing; for the adventurous, luxury holidays. Think about your weaknesses, challenge yourself to cut your spending on those items, and redirect that money to your emergency savings account, says Burger.

Invest in a more economical vehicle

With the increase in the cost of petrol, it might be worth your while to investigate buying a more economical vehicle. This could save you a small fortune, especially if you can negotiate to work from home a couple of days in the week so that you can stretch your petrol money even more.

Talk to a financial advisor

During these uncertain times, it is good to speak to your financial advisor. They are trained and qualified to support and guide you to reach your financial goals for the future. “One bad financial decision today can affect your entire future. If you are consulting an accredited financial advisor, you won’t make emotional decisions based on the instability that we are all facing today,” say Burger.

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T&Cs apply. The NMG SA Group of Companies are authorised financial services providers t/a NMG Benefits.