Get out of debt
Paying off debt should be a priority especially because interest rates on store accounts or credit cards are typically higher than those paid on savings.
Invest for your retirement
In order to maintain your lifestyle in your retirement years you should aim to save at least 15% of your income into a retirement annuity, pension or provident fund for the course of your working life. Remember to select a low-cost index tracking fund, and a portfolio positioned for growth.
Save for emergencies
Life is unpredictable. While you can’t anticipate every hurdle you may encounter, you can prepare an emergency fund for serious financial events such as unexpected retrenchment or a life event that leaves you unable to work. Generally speaking, an emergency fund should consist of three to six months’ worth of expenses. This should be held in a high interest savings account with flexible access for when you need it.
Goals
Once you have your retirement and emergency fund covered you can start focusing on other goals. For example, a deposit on a home or car, or a vacation. How you prioritise these goals is up to you.
Saving up, instead of borrowing or financing, will save you money on interest and leave you with more disposable income.
