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10 spending, borrowing, and savings rules that you need to know

Culture is likely to have an impact on how people spend, borrow, and save money. A culture can emphasize sharing, saving what you have for tomorrow, expanding what you have to have more in the future, and so on. However, cultural influence may be one-sided.

Financiers and mathematicians have influenced the matrix of saving in order to come up with better ways to save, borrow, and spend. There are yardsticks available to assist in maximizing one’s spending, borrowing, and saving capacity.

We’d like to share some of the world’s most renowned knowledge on saving, spending, and borrowing with you in this article. We want to help you improve your finances by providing you with information from the best thinkers in the world.

For educational purposes, we have compiled a list of ten spending, borrowing, and saving rules that you should be aware of. The following is a list of ten rules that you should be familiar with in order to utilize your income in the best way possible.

On Savings

1. Save For Retirement 

With South Africa’s life expectancy increasing, now is an excellent time to plan for retirement. Life expectancy is currently at 65 years old, and it has been steadily increasing over the last five years. It is safe to start planning for retirement at a young age so that you can maintain your current lifestyle when you retire.

Saving for retirement also has tax advantages. Contributions to pension, provident, and RAF funds are tax-deductible. The deduction is limited to 27.5 percent of taxable income and has an R350,000.00 annual contribution limit.

Contributions in excess of the limits are rolled over to subsequent years, so even if you have contributed more than R350,000.00, you will be eligible for deductions in subsequent years.

There are numerous ways to save for retirement, which can be accomplished through either local or international investment channels. When investing for retirement, some options to consider include hedge funds, unit trusts, pension funds, and retirement annuities.

It is important to note that the majority of the investment vehicles available for retirement investing do not provide guarantees on the principal amount. Before making a retirement investment, it is necessary to conduct extensive research. Hiring a financial advisor can be beneficial.

2. Have An Emergency Fund

An emergency fund is a must-have because the future is uncertain, and you need to be financially prepared in case of an unforeseeable event that necessitates spending. Starting an emergency fund does not require a large sum of money; therefore, a small monthly contribution to the fund can go a long way.

Saving for emergencies should become a habit, and money saved in an emergency fund should only be used for emergencies. Money should be set aside for emergencies such as car repairs, replacing or repairing important household items, and so on.

According to Vanguard, you should have an emergency fund that can last between three to six months. The funds can be saved in various accounts or in a single account that earns or does not earn interest. The money, however, must be easily accessible because it is to cover occurrences that occur in an instant.

3. Save For Goods And Services

If you plan on purchasing furniture or renovating your kitchen, it is a good idea to save for such expenses. Saving for household expenses will help you avoid borrowing money to cover these costs.

Open a savings account for items and services you intend to purchase in the near future. To begin saving, you can open various accounts such as a Tax-Free Account, a Notice Account, and others.

You can save and earn interest by opening a fixed deposit account that allows you to withdraw funds at a predetermined date. On the due date, funds will be made available.

4. Saving For Your Fees and Children Fees

Saving for school fees may not be at the top of your priority list, but it should be, especially if you want to start school on a specific date. By putting money aside on a monthly basis, you can save for all or most of your fees.

The inability to save for fees could be due to the qualification you wish to pursue. For example, an MBA will cost between R100,000 and a couple of million rands for the duration of the program.

For your children, it’s a different story; you’ll need to budget for their school fees whether you live to see them graduate or not. An insurance policy is a good way to ensure that your children receive the best education possible even if you die.

On Borrowing 

5. Home Loan

Many people aspire to own a home, and when presented with the opportunity to do so through a loan, many will jump at the chance. There are, however, some considerations that must be made.

The first step is to determine whether you will be over-indebted by taking out a home loan. This is due to the fact that a home loan takes longer to repay. Before applying for a home loan, ensure that your credit utilization is low and that you can afford it without jeopardizing your lifestyle.

When looking for a home loan, look for one with a fixed low-interest rate. Lumpsum payments on a mortgage should be made with caution. If you know you are covered for retirement and have paid off other types of debt, make lump-sum payments.

6. Using Credit Cards For Convenience 

Credit cards may be appealing to use on a daily basis, but they come at a high cost. A credit card can charge interest rates ranging from 15% to 22.5 percent per year. This is a significant cost to bear if the funds were used to purchase items that you do not require at a specific point.

A credit card, on the other hand, comes with a plethora of benefits that can be taken advantage of. These benefits are available to those who use their credit card frequently. Travel benefits, loyalty benefits, and other perks are available. When using credit, avoid chasing after these perks because they can lead you to spend more than you need to.

If you have enough money to pay for whatever you want with cash, avoid using credit cards. Where there is a direct benefit to using a credit card, you should use it. If you prefer to pay in cash, a rewards card is the best option for you.

When looking for a credit card, look for ones that offer more rewards and have a sign-up bonus. Customers who activate their American Express credit card, for example, receive 10,000 points which is a good deal for someone that wants to open a credit card facility.

7. Car Finance

Car finance is one of the most expensive loans one can take, only surpassed by a home loan in many scenarios. If taken for the right reasons, car finance can be a worthwhile investment. Taking out a car loan must be something that is planned for.

Taking into account factors such as current financial situation, insurance requirements, and other costs associated with the car being purchased on finance is something that needs to be done. Considering the state of the economy, buying a car right now isn’t a good idea for the average person.

Motor vehicle prices have risen as a result of Covid-19 and supply chain issues. Buying a used vehicle, on the other hand, can be a viable option. This method will save you money that you can put towards other things.

Purchase a well-maintained, fuel-efficient vehicle from an authorized car dealer. Consider driving the vehicle for several years while servicing it on a regular basis. If you have enough money to avoid a car loan, pay cash for a vehicle.

Car financing comes with its own set of rules that must be followed. Furthermore, a new vehicle is costly and may come with a mandatory warranty package.

On Spending 

8. Have Insurance Policies

An insurance policy may be the least of your concerns, but it is critical to have at least two, one for your life and one for your health. When you die, a life insurance policy will help you protect your legacy or maintain your estate.

Health insurance is critical because your life may depend on it one day. Health insurance provides access to private healthcare, allowing you to afford some of the most costly medical procedures and medications.

A funeral plan is also an insurance product to consider in order to be buried according to your wishes. A separate funeral plan may not be required, as life insurance policies now pay out a portion of the insured amount to the beneficiaries to cover funeral expenses.

Protecting yourself and your estate are just two examples of insurance products that are extremely important in life; however, there are other insurance products to consider. Insurance for personal and business assets should be considered to ensure that your hard work does not go in vain.

Insurance for portable possessions, buildings, home contents, and motor vehicles are some of the products that can be taken to safeguard assets. You do not need to obtain all of the insurance products because they will be prohibitively expensive and difficult to maintain premium payments.

9. Stick To The Budget

A budget is a detailed plan that outlines how income will be used to cover expenses over a specific time period. A budget is created before any income is spent, and every household should have one. It is not something to jot down and then forget about.

A budget is something that must be followed in order to meet spending, borrowing, and saving goals. Disregarding a budget is a bad habit that should be avoided because it is harmful to your financial goals.

Following the budget will limit spending in particular, as many people struggle to maintain their spending budget. Any unplanned expense can be carried over to the following month or get covered by an emergency fund; however, only if the expense qualifies as an emergency can it be paid immediately.

A budget must be executable, so expenses must be realistic and well calculated. Inability to create an executable budget can lead to spending more than one should. So, when it comes to numbers, be precise and use current prices.

10. Buy Using Cash Where You Can

Avoid using credit as much as possible; if you have cash, use it to cover expenses or to purchase assets. Avoiding credit will liberate you in more ways than one, for example, you won’t have to pay interest for using money issued on credit.

Credit, on the other hand, can be a great financial leverage tool that allows you to do more. Even if you have enough money to cover your expenses or purchase an asset, a credit card can be a good option.

To understand the benefit of paying with credit rather than cash, an opportunity cost must be calculated. If the results of a credit transaction are favorable, then credit is the way to go.

Personal loans and credit cards are examples of credit that should be used as a last resort. These have a very high-interest rate, which makes defaults on the account difficult to settle.


Saving, borrowing, and spending money all have an impact on your future. Investing some of your time in learning about personal finance can help you make sound financial decisions. A motto may not be what you require; rather, you require a strategy to manage your finances.

Personal finance entails learning the art of saving, borrowing, and spending. Your money will go a long way if you master the subjects. A large salary may be ineffective if it is not spent wisely. We hope that our article has helped you understand some of the important factors to consider when managing your personal finances.



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