Category Archives: Money

Most important things to do with your bonus

bonusThere are many companies who don’t or can’t afford to offer a bonus to their employees. It’s an unfortunate reality but in today’s economy many companies simply don’t have the additional money to splurge on Christmas bonuses. So, if you are lucky enough to be employed by a company that can reward your hard work with cash then you’re in the pound seat and you should use that to your advantage. Meaning, you should use your extra money wisely. In a way that will make it last and add value to your life.

 

It’s easy to sink into a mindset that you have worked really hard this year and so therefore whatever bonus you get you should be allowed to spend it on spoils and entertainment for you and your family. And this won’t be a waste because you’re all likely to thoroughly enjoy a fancy holiday or brand new stuff like gizmos and gadgets and so on. However, this money could create a better quality of life should you put it to good use.

 

Here’s how you should make use of the extra money you receive.

 

Make improvements or shift longstanding debt

 

By making some home improvements you increase the value of your property. This is worthwhile as when you look to sell in the future you’ll want to get the best possible value for your property and hopefully make a hefty profit. What’s more, the small home improvements you make will give you joy and keep your house maintained. These improvements can be small but impactful. Consider, security systems, revamping your pool, building an indoor braai or give your home a fresh lick of paint. And, of course, you can push the bonus into your bond and chip away at that longstanding debt a little quicker.

 

If you don‘t own a property then consider your car. While it is a depreciating asset, it’s eating into your expendable income every month. Lowering your repayments or shortening the period of time it’ll take for you to repay the vehicle is a smart thing to do.

 

Consider your retirement annuity

 

Read up on any financial advice and you will find yourself reading all about retirement annuities. They’re imperative to have if you hope to have a comfortable retirement. What’s more, retirement annuities are taxable so your annual rebate will see you getting tax back for having invested your money so wisely and you’re likely to receive a bonus from the tax man for this type of injection of money. Because a retirement annuity is akin to a long term interest bearing savings account you could start it off with a lump sum.Your bonus could be a hefty sum of money to start off with, this will go a long way to begin your retirement fund. Also, a retirement annuity can be cashed out if you end up needing the money urgently – there might be a penalty involved but it is available should you require it. However, the idea behind a retirement annuity is that it is there for when you can no longer continue working.

 

Get rid of bad debt

 

There is such a thing as good debt vs. bad debt. Bad debt is considered the likes of retail accounts, credit cards and things that have high interest rates. It’s bad but most of us have been there. We’ve bought what we wanted rather than denied ourselves and we’ve gone ahead with the purchase on credit. These store accounts and credit cards charge an incredibly high interest rate and can take ages to pay off, all the while these retail stores are pocketing additional money from you to cover the interest rate. It is a really good idea to pay off this lingering debt with your bonus but if you do this then cut up the cards as soon as it’s paid.

 

Start an emergency fund

 

An emergency fund is something smart people do. Be smart and start one with your bonus. This will cover you when emergency strikes. Emergencies can include car issues, medical emergencies, losing your job and any other unforeseen expenses. Emergency funds should ultimately cover at last six months of your salary, in this way you have your own salary insurance and if anything untoward were to happen you’d be able to pay your way for at least half a year. Sound good? Get a head start then by investing your bonus into an interest bearing savings account.

 

Bonuses could be fun and could offer you a couple of amazing adventures if you splurge but these won’t help you at all in the long run .

 

6 ways to appear richer than you are

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Sometimes it pays to look like you have money. It might sound silly or pretentious but there are times when people thinking you’re rich can seriously benefit you. For example, if you’re looking for investors in a new business, they’ll be more comfortable if you already appear successful. In other words, they’ll trust you with their money because you look like you’ve already made money. That’s just one example, there are many more.

It’s not as hard as you think to look like you have cash to spare. You don’t have to spend excessive amounts of money or get yourself into debt to look like you have a premium lifestyle. It just takes some clever thinking and a little extra effort. To help you out, here are six ways to appear richer than you are.

Buy a second-hand luxury vehicle

You may think that purchasing a new car looks better than going for a second-hand car. But that’s not always the case, especially if you’re smart about it. Think about it. You could buy a brand new entry level vehicle or spend a little more on a second-hand luxury vehicle. You don’t need to have the latest model. Not all people with money buy a new car every year but they do always purchase the best.

Take some time to shop around for the best deals. Look for BMW second-hand cars for sale in your area. Think about what type of car you want beforehand, just don’t be too picky about the specific model. For example, look for BMW 3 series used cars for sale or BMW 1 series second-hand cars for sale and see what you can find.

Choose a nice neighbourhood over a nice house

Where you live matters. You can have the nicest house in a horrible area and no one will ever believe you have money. But if you have a smaller, less impressive house in a nicer neighbourhood, it’ll look better. How often do the types of people you’re trying to impress actually visit your home, anyway? Probably not ever. But they may ask where you live and you can answer honestly with pride.

And you don’t have to live in the worst house on the block. You can simply buy something smaller. Or maybe a house with a few things that need to be fixed up but aren’t really visible. So even if people do come over they’re not going to immediately think you don’t have as much money as you want them to think you do.  

Splurge on a few expensive clothing items

You don’t have to wear brand names all the time and you don’t need to own 40 different outfits that come from high-end stores. All you need to do is buy a few good quality items that can be worn with other, less expensive items on a regular basis. Items that should be good quality include jeans, suits, skirts, party dresses and any formal wear. Once you have the basics you can dress them up or down with other clothes from your wardrobe. No one will notice your white T-shirt is from a budget store as long as it doesn’t have any branding on it.  

Have a few signature accessories

You don’t have to have a watch to go with every outfit or jewellery for every occasion. You just need to have a few high-quality items that go with everything. A simple diamond pendant will go with everything from a casual outfit to a party dress and no one will notice that you only wear that one necklace. And nobody is going to point out that you wear the same watch every day. And if anyone does ever ask you, say it’s for sentimental reasons.  

Shop at second-hand stores

You’ll be surprised what you can find at second-hand stores. You could kit out your home with amazing vintage furniture and artwork without spending everything in your savings account. You may find incredible deals on high-quality brands at second-hand shops. Just try to find the places that not everyone knows about. The hidden gems always have great stuff if you look long and hard enough.  

Never ever talk about money

For one thing, it’s considered rude to talk about money. For another, wealthy people have enough money not to have to think about money so they rarely talk about it. Don’t talk about how much you spent on something, don’t hint at what you earn and don’t ask people how much something cost them. Act like money doesn’t exist and you’ll be alright.

Renting and leasing a business vehicle: What you should consider

Businesses can use vehicles in various beneficial ways. That means regardless of how many cars – if any – your business owns, you should still take an interest in how vehicles get leased and rented. They can aid in productivity, marketing and help provide transport for staff. Vehicles are central to many businesses so it’s important to consider what you need.

Business has gone global but remains local

These days it’s easy to overlook the importance of transport, if your business can be conducted from one place. You can make important meetings with Skype, collaborate on documents from anywhere and send important files without leaving your home. The digital workforce has radically changed how businesses operate, thanks to the internet. As Small Business Chronicle notes:

“A business is no longer dependent on its local customer base for its survival; it now has a worldwide audience for its goods and services. The Internet has changed not only a business’ customer base, but how a business communicates with its employees, and finds and manages the competition.”

By existing online, your business automatically has a global presence. However, this should not make us forget about geographical location. Consider, for example, the point of local SEO. As Entrepreneur magazine highlights:

“By optimizing your company website with neighborhood terminology, you can make strides in local searches that target the informal space of your neighborhood while also ranking in the official algorithm-selected region. There are things that you can do to optimize your business for the possible neighborhood algorithm from a strictly local optimization perspective.”

Keeping your brand local is also important, depending on the work. After all, when searching, customers do tend to use map searches and will investigate businesses in their local area. No matter how good a business is, even one that’s closer can sometimes win out because most people hate travelling. This is why it’s important not to forget the importance of geography.

And with geography comes travel. This is where vehicles come in.

On using and leasing vehicles

With geography and proximity being key factors for business, it makes sense to care about transportation. Businesses often have to transport goods or individuals to clients. While it’s true meetings don’t have to be face-to-face thanks to the internet, onsite business deals do sometimes have to happen.

Of course, none of this means you should own a vehicle – all it means is sometimes businesses need to use one. This means you can rent one. So the question then becomes: how does a business lease a vehicle? Leasing through a business is often better perceived by car dealers, as the Telegraph’s James Foxall noted:

“I naively thought it was possibly down to business customers being less of a risk. Not so, apparently. According to Malcolm Banfield, sales director for RCI which provides all the finance for Renault, Nissan and Dacia, car companies tend to get less back from businesses that default on payments. This is because there are usually more creditors further up the queue of people to be repaid compared with private customers.”

The question still remains whether you should buy or lease a vehicle. The Balance highlights the various considerations when it comes to this question. First, it requires figuring out the purpose of the vehicle and how much you are able to spend. That means knowing whether paying back a loan versus paying the lease will be more feasible. If you need the vehicle for long term projects and it will aid productivity, it makes sense to attempt to repay a loan rather than lease. After all, at the end of a lease, the car still doesn’t belong to you. Of course, this requires a down payment you may not immediately have. An option here is to initially lease a car to improve profits, then once profits maintain, use that to start saving for a down payment that can go toward loan repayments.

Cars are not only used for transporting people and goods, but make for good marketing too. Putting vehicle wraps on a car, for example, allows for marketing while travelling. In terms of leasing or buying, some leasing contracts do allow businesses to use their cars for advertising. All it requires is proper negotiating and a careful read of the agreement. For example, not putting wraps on that can potentially damage the car, using graphics that can be easily removed and so on.

In the end considering a vehicle for business requires careful consideration. They can be an essential part in delivering on a company’s promises. Yet, they can lead to unnecessary expenses if you’re not careful about precisely why you’re using them in the first place.

Investment, frugality and other ways to retire right

coinsEveryone wants to create a life of success and stability. In this world, the only way to do that is to have enough wealth accumulated to live off. Naturally, you can continue to work and earn an income, but the majority of people will not have such an opportunity. To that end, it’s worth considering what kind of steps will aid you in achieving a better financial future. It will not be easy, but it will be harder still if you don’t act now. Let’s consider some ways you can begin taking steps to help retire right.

Savings

The most obvious way to obtain wealth is to accumulate it slowly. This allows you to put away a small amount each month, leading to a large outcome benefiting you at the end of your working life. Savings accounts rely on compound interest. As The Calculator Site summarises:

“Basically, you’re getting paid to do nothing more than keep your money in one place (a savings account). You don’t need to juggle finances. You don’t need to try and calculate monthly or annual returns – it’s all done for you. At its simplest, the investment vehicle you put your money into will give you interest on the interest they’ve already paid you. Money for nothing – seems like a good deal. And the banks just keep on giving. As long as you leave your money in an account, it will continue to accrue interest.”

By simply leaving money alone, you can benefit enormously. But this means having the money in the first place. To get this money requires its own thinking and interventions.

Be frugal

A common issue is that people struggle to think long term. As Forbes’ Gregg S. Fisher points out, this is known as self-control bias.

“[this is] the common condition where people fail to act in pursuit of long-term goals due to a lack of self-discipline. Workers know logically that they need to save more for retirement, but they struggle to forgo present consumption, owing to lack of self-control, an emotional bias. Consider Warren Buffett’s simple definition of investment: ‘Investing is forgoing consumption now in order to have the ability to consume more at a later date.’”

Before tackling the topic of investing, it’s worth thinking about how you can be frugal. There are large and small changes you can make to your life that will lead to more savings. In their comprehensive list of ways to be frugal, Money Crashers points out how avoiding speeding tickets is one easy way to reduce unnecessary expenses.

“The next time you have somewhere to be at a specific time, set your alarm for 15 minutes earlier than you would ordinarily. Not only do you stand to save money by driving the speed limit, you might also save your life – or someone else’s.”

Furthermore, you can get flagged by insurance companies as reckless, if there are tickets linked to you. This could mean paying more for your premiums years into the future.

Also, if you don’t need a specific item right now, consider waiting for a sale. Items that are luxuries should be considered thoroughly before buying. Remember that the money that goes into an expensive luxury item could end up benefitting you far more if it’s put away in a savings account, to let compound interest take effect. It’s more valuable in this way, than for any one single item. Another way to think about it is like this: the money saved can end up buying two luxury items in the long term, rather than just one now in the short.

Investments

Naturally, the other common option is focusing on investments. There obviously exists specific investment plans focused on retirement, but you should consult with brokers to look wider. If possible, investigate as many as possible, including tax free options.

Unlike savings, investments are more risky, but ideally you will have diversified where you put your money. This means both savings and investments. In this volatile economic climate, it can be difficult and people might opt for the safer option. But investments are significantly better for acquiring wealth, since they have larger returns and tend to overcome inflation.

Summary

As Fin24 noted, it is possible to think of alternative uses of your money for retirement:

“If you decide to save for retirement on your own, you can choose to receive your full salary (which attracts tax) and then save a portion of this money towards retirement. A more efficient strategy would be to utilise a company pension fund and contribute the maximum amount possible to achieve the tax deductions available in terms of pension savings.”

New tax laws are also allowing for better, smarter responses to savings and tax deductions. As Business Tech highlights:  “It is envisaged that workers will be encouraged to save (more) through retirement funds, to curb old-age poverty and excessive dependency on relatives.”

By thinking broadly about your money, you can find an optimal solution. Your life can eventually lead to a smooth retirement but it won’t be easy. The time to start is now.

 

 

How to carve out a financially stable future

The future is quite terrifying for many of us, since we have little idea what could happen tomorrow. All of a sudden, our life could change because of forces beyond our control. Though we often try to prepare for the worst case scenario, our ignorance – whether willful or not – can still blind us to possible radical changes. To help protect ourselves and our families, we must begin considering ways to create a financially stable future. This will help create a solid foundation which could help lessen any negative effects life throws at us.

Budget and save

The first thing anyone must do when tackling their financial stability is create a budget. This means having firm knowledge about how much we earn against how much we spend. Within this, we can begin creating categories of expenses: necessities, luxuries and so on. By having firm numbers, we can see if we’re spending too much on luxuries and not enough on savings.

Obviously we can’t save what we don’t have – but it could be that potential savings are being squandered on unnecessary items we can live without. We can buy cheaper food, avoid frequent social engagements, drive less and so on. Money Crashers’ budget guide notes that budgeting is key to all financial decisions.

“Once you have an established budget, you will want to keep it in check. The discipline and associated knowledge that you are making good long term and short term financial choices will … take you from living paycheck to paycheck to being able to see the long term results of your disciplined savings and financial planning.”

Learn about investments

The stock market is a tricky beast. It takes years to learn the various mechanisms, rules, players and actions involved. This is why people tend to give their money to brokers and others who work daily with such complicated systems. We should investigate what investments are best for us, depending on our budget and plans. It could be that the simplicity of, say, Sanlam unit trusts are better suited than investing in property.

Work hard, get raises

One of the most important aspects of living is earning enough to live. We have to be able to make enough that inflation doesn’t catch us. Inflation means, basically, the value of our money decreases in terms of purchasing goods and services. R50 today buys far less than R50 of ten years ago. This is why we need to focus on salary increases, since we want to stay ahead or keep up with inflation. The salary we got a few years ago might have been able to maintain our lifestyle, but today, if we have that same salary, we can do far less with it. This is not a sustainable way of living – not to mention this provides no opportunity to save and create retirement possibilities.