Saving and investing form a part of creating the financial future that you desire. But why wait until you have entered the world of work to start shaping your financial future? Determining your financial future can begin whilst studying your degree — the trick is in knowing how to go about it.
Ivyn Sambo is a law student studying at the University of the Western Cape. He has shown that it is possible to start saving towards your financial future whilst studying at university.
He is currently saving up to purchase a car ⎯ a Datsun Go. “I will be entering the work market and I need to enter it with a car already.”
Sambo bases his financial goals on what he wants to achieve, and the amount needed to achieve the goals. “I try to keep it as simple as possible and easy to achieve.”
He does not like to set goals which are hard to achieve because they demotivate him.
Choosing a suitable product
When it comes to choosing a suitable financial product, one should always link their product choice to the term of their goal. This is according to Ettienne Wilsnagh who is an accredited Old Mutual Agency Franchise principal (owner) and entrepreneur.
“For [savings] products under five years, it’s unit trusts, fixed interest type of accounts and your Tax Free Savings Account (TFSA),” he tells MatieMedia.
Saving
A savings account is the recommended product for students who want to save at an affordable cost. This is because there is no charge for skipping a month of adding money to the savings account.
This is according to Katlego Mei who is a certified financial planner for Galileo Capital, a registered financial services provider.
As a university student, “you don’t know if you’re going to need more of your allowance in a certain month, so I would stay away from products that charge penalties”, he says.
To know which savings products charge penalties, one must ask the person recommending the product and read the documentation provided to understand the product, according to Mei.
Katlego Mei who is a certified financial planner for Galileo Capital, a registered financial services provider, explains why the Capitec Savings account is a suitable savings account for university students. AUDIO: Tina Ddamulira
Investing
It is also possible for students to start investing whilst in university, according to Joseph Phiri, a certified financial planner at Alexander Forbes.
The TFSA allows one to invest with small monthly contributions, he says. “[…]Depending on service providers, minimum contributions are between R200 – R500 per month,” he tells MatieMedia in email correspondence.
It is also possible for students to start investing whilst in university, according to Joseph Phiri, a certified financial planner at Alexander Forbes. For instance, the Tax Free Savings Account which allows one to invest with small monthly allowances, he says.
PHOTO: Tina Ddamulira
Students can also start investing an emergency fund in a money market or savings account whilst studying at university.
This is according to Warren Ingram, an award-winning wealth manager, author, public speaker and director and co-founder of Galileo Capital Group.
“The amount saved in this account should equal three months of expenses,” says Ingram. “If your regular expenses are R5,000 per month, your emergency fund should be R15,000,” he adds.
Thereafter, one can start investing, according to Ingram.
However, students should ask the following questions when deciding whether to invest, says Mei:
- What is the term of the investment?
- What are the fees or costs associated with the investment?
- What are the rules of the investment?
- Are there any penalties for withdrawing money?
- Is there a minimum amount required?
- How does the product align with my goal or objective?
Working your way around taxes
It is suggested that once students start working and acquire more financial products that it is worth knowing which products offer tax relief.
This is according to Tanya Joubert. She is a wealth adviser at PSG Wealth Pretoria East whose opinions in this article are not necessarily those of PSG Wealth and do not constitute as advice.
Joubert also says that hiring a tax consultant, for tax assistance, can be beneficial.