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Today’s Slice is for all the designers, media producers, contractors, commission workers and other brave souls who don’t fit the nine-to-five mould! 

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Here are five practical tips for budgeting when you don’t receive the same amount of money each month: 

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1 Only work with what you’ve already earned

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Resist the urge to make plans for money that hasn’t come in yet. It’s hard, we know, but it’s the only way to ensure financial security.

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Look at what’s currently in your bank account. Only then, ask yourself: ‘Can I afford this?’

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2 Know your expenses

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Money anxiety kills the fun in life. Take control by making your money work for you, not the other way around. 

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Use 22seven to see all your monthly expenses. See how much you spend on food, how much you spend on medical aid, how much you spend on electricity, how much you spend on your cellphone… 

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Having a clear idea of your expenses – and where you need to allocate your earnings – will free up headspace for your real job. Time to land that big contract you’ve been dreaming about!

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3 Eliminate surprises

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It might feel like your money is vanishing mysteriously every month, but in reality, very few expenses are actually a surprise. Even the random ones: You know your car will have problems at some stage, your laptop will die and you’ll need a new one urgently, your annual software subscription will need to be renewed…

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Prepare for this by treating irregular expenses the same way as recurring expenses. Jot down how much a replacement/renewal/fix is expected to cost for each item that you can think of and how long before you might have to pay, then work out how much to save each month. Build up a kitty for those ‘surprise’ expenses and you’ll never be surprised again.

4 Be flexible

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If your circumstances change, so will your budget. It’s not set in stone. If you earn more, you can consider saving more. Or, if things are tight for a while, you can use money allocated for your ‘wants’ to cover your ‘needs’. 22seven makes this super easy: You can change the amounts in each budget category depending on your situation.

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5 Build a buffer

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Your income might change from month to month, but your expenses will remain relatively constant. Prepare for this by putting money aside each time you get paid so that you can build up a buffer to cover your expenses for a certain period of time. Each person’s situation is different but start off by trying to buffer one month’s worth of expenses. Build that up to two or three months over time. You’ll know when you’ve hit the mark.   

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We hope these tips will help you to take control of your awesome, flexible, freelance life! Please be aware that we’ve only discussed managing expenses with an irregular income – consider discussing other important financial aspects like retirement planning and life cover with your financial advisor. 

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This weekend, more than 20 000 cyclists will take to the car-free roads of the Cape Peninsula for the 45th edition of the world’s largest timed cycling race. Yes, it’s Cape Town Cycle Tour again!

The CTCT – previously the Argus Cycle Tour – is a beautiful experience and a huge asset for the Cape Town economy as thousands of people travel to the city to participate. According to David Bellairs, the director of the Cycle Tour Trust, just under half of this year’s entrants will be coming from outside the Western Cape.

We wanted to know how much the CTCT benefits Cape Town, and what kind of financial investment is required when it comes to your bike and your gear.

First, we identified 22seven users who entered the 2022 Cycle Tour. Then we split this group into those who live in the Western Cape and those who travelled from other provinces. Of the group living in other provinces, the average entrant spent R1,120 over the weekend on eating out and entertainment – two categories that are most likely to benefit the local economy. By comparison, entrants from the Western Cape spent R767 on the same categories.

This shows the value to Cape Town of attracting participants from outside the local economy…

Next, we wanted to know what it takes to ride the Cycle Tour. Not the physical effort – the financial cost!To find out, we tracked the spending of users who entered the 2022 Cycle Tour at more than 25 bike shops across the country over the six months leading up to the event. The average spend by 22seven users was R1,680 over the period, or R280 per month.

Are you riding this year? Good luck to all the participants! Hope the sun shines and the wind stays away. Have a safe ride and enjoy.

The days are long gone when you’d go into Incredible Connection and buy a CD with the latest version of Microsoft Office on it. (CDs… Remember them?) Waiting for your favourite TV show every Wednesday at 7pm is also ancient history. 

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We live in an age of subscriptions. You can subscribe to anything, from software to streaming services and even a monthly coffee delivery. But are you keeping track of whether you’re using all your subscriptions enough to justify the price you’re paying? 

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Here are seven ways to stay on track.

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1. Keep a log

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It’s easy to press a button and subscribe, or to accept a free trial. But it’s also easy to forget about it and keep paying without using the service. 

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Keep a subscription log where you list each subscription by type, name, cost and payment frequency. This will help you see if there are unused subscriptions or duplications. 

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2. Make some rules 

If you’re someone who is easily tempted, set rules for yourself. 

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For example, tell yourself that if you don’t use a service for three months, then you’ll cancel it. Or that you can only subscribe to one streaming service at a time. This will keep your costs down and save you money over time. As you know, it all adds up. 

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3. Cancel subscriptions you don’t use

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This is a no-brainer. Most subscriptions are easy to turn off and easy to turn on again in future if you need to. For example, you can rotate between streaming services. If you’ve had Disney+ for a while and you can’t find anything new to watch, cancel it and give Showmax a try for a month.

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Go through your transactions on 22seven and check whether there are deductions going off each month that you can’t place. Cancel them if they’re subscriptions. Remember that crossword game on your phone you signed up for six months ago? Kill it!

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4. Make use of free trial periods and specials

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Most subscriptions have a trial period of a week or month. If you need a particular service as a once-off, use the trial period – just remember to cancel it in time. 

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Many subscription services also run specials. Consider waiting for a special and sign up while the price is lower. 

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5. Resist the urge

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Do your research. Do you really need the subscription? If it’s software, there might be a free version that does something similar – use that version until you need all the extra bells and whistles. 

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6. Share your subscriptions

 

Some subscriptions give you access to several profiles that can be shared between family members. This way you can split the cost and get the same value for less. 

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Each offer is different. Make sure to read the rules before you subscribe.

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7. Review your subscriptions regularly

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Set a reminder to review your subscriptions every three months. This way you can get on with your life and not worry about it until your calendar pings you. 

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That’s it! Enjoy your subscriptions and use them wisely. Always think about what else you could buy with the money before subscribing. This helps to put things into perspective. 

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The price of groceries is skyrocketing and all South Africans are feeling the pinch. In January, the food inflation rate was 13.4% – the highest it’s been since 2009. It’s more important than ever to plan how you shop for food and to monitor your spending.

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All of us have certain items that show up regularly on the shopping list, like toiletries and pantry staples. You can boost your smart-shopping game (and save!) by identifying your weekly or monthly repeat items and considering their bulk cost. 

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But buying in bulk is not always as straightforward as it seems. Here’s what you need to know so you can do it right.

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Unit price 

When items are sold in bulk, the price per unit is often lower than if the same item was sold individually. Most items sold in bulk will have the total cost and the unit cost on the price label – even online. Compare the unit cost in bulk to what you’d pay if you just bought one item off the shelf.

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Quantity 

Buying in bulk can save you money, but only if you're buying the right quantity. If you buy too much milk, for example, you risk it turning to cheese before you can use it all. You also have to consider your storage space – where are you going to fit that 5kg bag of White Star? That said, you can always make some more space in a kitchen cupboard by selling that blender you never use, or getting rid of that weird cutlery set your auntie gave you in 2013. Marketplace, ka-ching! 

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Expiration date

This is crucial, especially for perishable items like food. Check the date and make sure you’ll have enough time to eat all the food you’ve bought in bulk. Otherwise, it will go into the bin or the compost heap and you’ll end up wasting money. 

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Quality 

Buying in bulk doesn't always guarantee quality. If you're buying food, for example, you may find that the quality of the food decreases as the quantity increases.

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Availability

Not all items are available in bulk, and some items may only be available in bulk at certain times of the year. This can limit your options and make it harder to save.

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Comparison shopping

Shop around to determine whether buying in bulk is the best option for you – a quick price check online is often all you need. Don't assume that because an item is sold in bulk it's the best deal!

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Do your homework 

Calculating how bulk buying can save you money is much easier if you’re well-acquainted with your budget for groceries and household essentials. Link all your accounts to 22seven so that you can see all your money in one place. Use the budget tool to monitor your grocery spending and to help you stay on track month-to-month. Give it a try! You’ll have grocery shopping sorted in no time.

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We all have perceptions about money based on how we were raised, the things we read and the social media we follow. But sometimes perceptions can hold you back, and the only way to grow is to let them go. Show these five money myths the door!

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Myth #1: I’m too young to start saving for retirement 

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Time is money, folks. Every day, someone reaches old age and realises they don’t have enough money to live on. They might not have saved enough, they might not have saved at all, or they didn’t start young enough. You already know we’re about to hit you with the facts about compound interest…

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In its simplest terms, compound interest is money that makes money. You invest money, which earns you interest, which grows your investment, which earns you even more interest, and so on. The key is time in the market – the longer you leave your money invested, the more you benefit. 

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It’s mind-boggling stuff. Read more here. 

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Myth #2: Rich people own mansions and fancy cars

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This myth is problematic because you might think you need to buy the latest Land Rover to feel accomplished and wealthy. Nonsense! When you don’t buy all of life’s unnecessary luxuries, you end up with more money in the bank and more money invested, which you can use for important things like your children’s education.

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Don’t let perceptions of wealth pressure you into spending your hard-earned cash on material items that depreciate. 

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Myth #3: Talking about money is taboo

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This is a biggie! We don’t suggest you tell everyone how much you have in your bank account, but we do suggest being open with friends and family about personal finance. Share ideas, tips, tricks and knowledge so your community can learn more. And don’t be shy to ask for help either. 

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Myth #4: Only rich people have financial advisors

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We hear this all too often. Generally, people believe that you need thousands and thousands ready to invest before you can seek the assistance of a professional financial advisor. That’s simply not true. There are lots of different financial advisors who work with people in all income brackets – and they really do provide value. Just make sure the advisor you meet with is transparent about their fees so that you know exactly what to expect. 

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Myth #5: I’ll never have enough money

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The week before payday, when the school fees have been paid, the groceries have been bought and your fuel tank is running low, we all believe we’re just not meant to have money, right? 

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While everyone’s situation is different and there’s no one-way path to financial freedom, try changing your mindset. Instead of thinking, ‘I’ll never afford that’, ask ‘How can I afford that?’ Let your mind wander. Read articles like this one, listen to podcasts and experiment with the budgeting tool on the 22seven app. With greater knowledge comes greater power – the power to save more, earn more and grow more! 

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Your credit score is a rating that banks and other financial institutions use to determine how much money they can lend you, and at what interest rate. It has a huge impact on your financial health and on your life in general. Home loans, cellphone contracts, car finance… These all hinge on your credit score.

Why is a good credit score important?

You get access to more credit and you qualify for better interest rates. The less interest you pay, the easier and faster you can pay off debt.

How is my credit score calculated?

Lenders look at various factors including your credit history and the amount of debt you currently have. If you’ve missed any repayments in the past, your score will suffer. Likewise, if you have lots of outstanding loans then your score will be lower.

Can I fix it?

Yes! It’s never too late to start improving your score. The sooner you start, the better.

Here are six tips:

1. Always pay your bills on time. Your payment history is one of the most important factors determining your credit score. Every missed payment has a negative effect –credit cards, store accounts, loans, insurance payments, utility bills… Use 22seven to create a budget so that you can set aside enough money and pay all your bills on time, every month.

2. Don’t spend wildly on your credit card. A high credit card balance can have a negative impact on your credit score, but at the same time some credit usage is better than none. Don’t use more than 30% of your credit limit and pay your card in full each month, or as much as you can afford above the minimum required payment.

3. Think before you apply. Every time you apply for credit, it’s noted on your credit report. Too many inquiries in a short period of time suggests that you’re scrambling for money, which can negatively impact your score. Only apply if you’re serious about taking a loan.

4. Monitor your credit score. Check your credit score regularly so that you know where you stand. Besides feeling empowered, you’ll also quickly notice any errors or potential fraud. There are a few apps out there that help you check your credit score. Ask around to find one that suits you best.

5. Use credit wisely. With great power comes great responsibility… Credit can be a powerful tool for building wealth but only if used correctly. Don't max out your credit card, don't make late payments and don't apply for more credit than you need.

6. Get professional help. If you're having trouble managing your finances, consider meeting with a qualified financial advisor who can help you consolidate your debt and structure a payment plan that works for you.

The bottom line
Building a good credit score is essential for financial stability and independence. It takes time and effort, but it's worth it. You’ve got this!

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What’s the deal with retirement funds and tax?

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In South Africa, a retirement fund comes with three important tax benefits: your contributions are tax-deductible; the returns on your investment are tax-free; and when you retire, you can withdraw a lump sum without paying tax (up to a limit and subject to certain rules).

 

Why does the government provide these benefits? Because there aren’t enough people saving! Giving people an incentive will hopefully encourage them to plan for their retirement and thereby reduce the burden on the state.

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So, how does the tax deduction work? 

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It all starts with your ‘taxable income’, which is used to calculate how much tax you pay. The greater your taxable income, the more tax you pay. You can deduct your retirement contributions up to a certain limit, which reduces your taxable income and your tax bill.

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What’s the limit? Currently, you’re allowed to contribute up to 27.5% of your taxable income or R350,000 per year, whichever is less. 

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Give me an example…

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Redi earns R35,000 per month and she has no tax credits from medical aid etc. nor does she contribute to a retirement fund. Using current tax rates, she’ll pay about R6,500 per month in tax. In annual terms, she earns a taxable income of R420,000 and faces a total tax bill of R78,000 per year.

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She wants to start contributing to a retirement fund and would like to know how much tax she can save. Adhering to the 27.5% limit described above, she can deduct a maximum of R115,500 per year, or R9 625 per month. Her new taxable income will therefore be R304,500 (R420,000 minus R115,500). 

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But not everyone can afford to contribute up to the limit. Redi manages to budget R3,500 per month to contribute to a retirement fund. Doing so immediately lowers her annual tax bill from R78,000 to R65,000 – a saving of R13,000 per year or R1 080 per month. Another way to see this benefit is to think that she’s saving R2 420 per month of her own money towards retirement, and the government is adding R1 080 per month on top of that.

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The more you earn, the more tax you pay – but the deduction benefit is also greater. Kamvelihle earns R1,2 million per year and pays R379,000 per year in tax. If he contributes R120,000 per year towards a retirement fund (R10,000 per month), he’ll reduce his tax bill by about R49,000. Put differently, he’s contributing R5,900 per month of his own money to his retirement, and the government is adding R4,100 per month.

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What must I do next?

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The 2023 tax year ends on 28 February. If you want to make use of the tax-deductible limits, you’ll need to top up your retirement fund before this date. 

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If you’re unsure whether you’re contributing to a retirement fund or how much you’ve contributed already, talk to your HR department or set up a meeting with a qualified financial advisor. Make sure your 22seven app is connected to all your accounts. That way your income and expenses will be accurate and you’ll quickly be able to see how much you can afford to save per month.

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Don’t delay! The earlier you can start saving for retirement, the better. 

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 How much do I need to earn before I have to pay tax? 

If you’re under 65, you don’t pay tax unless you earn R91,250 or more per year (R7,604 per month). This changes for people aged 65–75, and for those over 75. See the SARS website for more info. 

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Read more 

• How much should I save for my retirement?

• Time is money: why you should start investing now

• Moving your retirement fund when changing jobs

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When you save for the long term, you’ll usually do so in a fund. A fund is designed to protect your money and make it grow, but there are literally hundreds of them to choose from, each with its own performance metrics and fees. How on earth do you understand what’s going on?

The best way is to learn how to read a fund fact sheet, also called a minimum disclosure document. It looks hectic at first glance but it’s actually not too complicated. Here are some key things to look out for:

Fund objective

A short summary of the fund’s main goal. For example, to provide a stable return above inflation, or to invest in high-performing tech stocks.

Fund strategy

Explains how the fund hopes to achieve its objective. You can decide if you agree with the way the managers approach investments, or whether you should rather look elsewhere.

Top 10 holdings, asset allocation and sector allocation

Most funds show their top 10 holdings – the assets or other funds where most of the money is invested. Asset allocation shows the breakdown of how the fund is structured: 70% in shares/equities, 15% in bonds and 15% in cash, for example. The sector allocation shows how much is invested in which sector, like 20% in financial stocks, 15% in technology stocks etc. These indicators should align with the fund strategy.

Fund information

Factual information about the fund. This section might include the fund size (total amount of money in the fund), the unit price (most funds are broken up into units, which are sold to investors), the risk category and more.

Benchmark

What the fund’s performance is measured against, or what it aims to achieve. A fund might set out to mirror the JSE’s top 40 returns, for example, and there’s a good chance it might achieve that benchmark, but it also might exceed the mark or miss it altogether.

Performance

Depending on how long the fund has been active for, the fact sheet should show its performance over a number of years relative to the benchmark. This information is helpful to identify whether the fund is meeting its objective.

Highest and lowest annual returns and maximum drawdown

The highest and lowest returns give you the best and worst-performing years of the fund. The maximum drawdown gives you the maximum percentage that the fund has ever dropped in one go.

Fees

Ah, fees. This is how the fund managers make their money, and it’s also where it might feel like you’re back in maths class. You’ll see things like TER (total expense ratio), TC (transaction costs) and TIC (total investment charge) but the most important metric for you as the investor is the EAC (effective annual cost). The EAC includes all the fees you’ll pay and shows the total cost per year of investing in the fund.

Ask for help

Being able to understand a fund fact sheet allows you to shop for investments with confidence, but you might still need some guidance about which aisle to shop in! A qualified financial advisor can help you choose the right kind of fund depending on your investment goals. Set up a meeting and take control of your life.

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New year, new opportunities to set yourself up for financial success! There’s no better time to take a good look at your moola, decide what you want to achieve in 2023 and work out a gameplan to reach your goals.

Here are five money habits to keep you on track.

1. Set specific goals
Before you can create a plan to reach your goals, you need to know what those goals actually are. What do you want to accomplish in 2023? Do you want to save for a down payment on a house? Pay off credit card debt? Build an emergency fund?

Whatever your goals may be, make sure they’re SMART: specific, measurable, achievable, relevant, and time bound.

2. Make a budget – and stick to it!
A budget is an amazing tool that helps you manage your money and achieve your financial goals. 22seven makes budgeting super easy. Link your accounts to track your income and expenses, then set limits on spending categories and let the app notify you when you’re approaching those limits. The more you know about how you’re spending, the better you can control it and take active steps to save.  

3. Save consistently
Talking about saving… It sounds boring but it’s an essential part of building wealth and achieving your long-term goals. It’s also really hard! Many people find it tough to scrape together anything to put away at the end of the month.

The best way is to start with what you can, even if it’s just a tiny amount. As your earning power grows, you can gradually increase your contributions. Ultimately, you want to save at least 10% of your income each month. This might not be possible right away, but it's a good goal to aim for. Consider setting up an automatic transfer each month from your cheque account to your savings account. This way, you’ll save money before you manage to spend it.

4. Avoid unnecessary debt
Debt can be a useful tool for a big purchase like a house, but it can be a trap if you borrow money for the wrong reasons. Short term loans and credit cards often have eye-watering interest rates – you end up paying back far more than what you borrowed. Avoid unnecessary debt at all costs. Before you take out a loan or pay for something on your credit card, ask yourself: Is this something I really need? Can I afford to pay it back? Are there more affordable options available?

If you already have debt, work on paying it off as quickly as possible using a method that best suits your financial situation. Consider the avalanche or snowball method.

5. Be mindful of your spending
Reckless spending can derail your planning. Try to be mindful every time you spend. Use 22seven to keep track of your purchases and try to spot opportunities to spend less. For example, you can buy in-house brands instead of name brands when doing your grocery shopping, you can shop around for cheaper car insurance, find a better deal on mobile data… And always keep the opportunity cost of money in the back of your mind when you make a bigger purchase, like buying a new TV or splurging on a weekend away.

Keep at it and these five habits will soon become second nature. It will take effort and discipline, but the rewards will be well worth it. Cheers to financial success in 2023!

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