Dying without a will has some severe implications for the loved ones that you leave behind. Especially if they are minors under the age of 18. Many South Africans do not have a will and this means that their estates will fall under the Interstate Succession Act.

The consequences are such, that the estate will be cashed in and the money placed in the Guardian Fund controlled by the Mater of the Supreme Court. This can have substantial logistical, tax, administrative and financial consequences.

Death is traumatic enough for those that you leave behind and not having your financial affairs in order further compounds the problem.

Here’s what happens to your estate if your children are left without a will.

Your assets get cashed in
Without a will your assets get sold at whatever price at the time. Perhaps you would have been better off keeping the house, the timeshare, and the car for the children. This would be specified in your will but without it, the path is set. Cash in and the kids will have to live somewhere else.

One stroke for all folks
The Trustees of Guardian Fund will decide where the money gets invested. This will take away any alternative financial opportunities that may be available to improve the returns on the investment. So your children will not benefit from objective and independent advice which may be more appropriate for them.

No control over children’s age to take over their inheritance
Letting the law dictate how your hard-earned assets are distributed puts your children at risk. The court will also decide who the guardian of your children should be and the children will be left up to the Guardian Fund when they turn 18 years old. This could be a considerably large amount which they probably won’t know how to manage properly at such a young age. Having a will in place specifying a more responsible age ( say 25) for the children to take over their inheritance will encourage better decision-making and appreciation of their windfall.

Spending a little time ensuring that you have a will in place can make a massive difference to the future of the loved ones you leave behind.

The findings reported in a recent City Press article reveal deeply concerning practices within the lending industry, specifically concerning payroll loans. These practices not only raise ethical concerns but also underscore the urgent need for tighter regulations to protect consumers.

Harmful salary deduction

One of the most alarming aspects of this investigation is the excessive deductions from municipal workers’ salaries, leaving them with unmanageable debt burdens. It is disheartening to see individuals being forced into such dire financial situations, with some receiving zero income due to these deductions. Such practices not only harm individuals and their families but also have broader societal implications.

Affordability a concern

Furthermore, the revelation that credit agreements are not consistently accompanied by affordability assessments is a significant concern. Responsible lending should involve a thorough evaluation of a borrower’s ability to repay, ensuring that the loan amount and terms are appropriate for their financial circumstances. Without such assessments, borrowers are at risk of entering into loans they cannot afford, leading to a vicious cycle of debt.

Hidden costs and fees

The lack of clarity around fees and interest charges adds to the opacity of these lending practices, making it difficult for borrowers to understand the true cost of their loans. This lack of transparency can lead to borrowers paying more than they should and, in some cases, for extended periods, further exacerbating their financial distress.

Recycling loans

Moreover, the recycling of loans, where borrowers are encouraged to take out consolidation loans to settle previous debts, is deeply problematic. This practice only serves to extend the debt cycle and increase the profits of unscrupulous lenders.

Urgent action needed

The City Press article sheds light on deeply troubling lending practices that demand immediate attention and regulatory reform. Lenders must be held accountable for their actions, and consumers need better protection to ensure responsible lending and borrowing practices in South Africa.

Rising global and local inflation rates are sending shockwaves through households as the cost of living soars. Families are finding it increasingly difficult to make ends meet, often resorting to credit cards to bridge the financial gap. In this challenging environment, there is alarming evidence of South Africans compromising on their nutrition as they struggle to cope with escalating prices on essential food items.

The confluence of high inflation and stagnant incomes has created a precarious financial landscape for many. To navigate these turbulent waters, it’s essential to adopt prudent financial strategies:

1. Shop Smart: Search for sales, discounts, and use coupons to save on groceries and essential items. Consider buying in bulk when possible to take advantage of cost savings. Look for value in loyalty programs.
2. Prioritize Needs Over Wants: It is a tough exercise having to distinguish between essential and non-essential expenses. The ‘must haves’ and the ‘nice to haves’. Focus on meeting your basic needs before indulging in discretionary spending.
3. Seek Financial Advice: If you’re struggling to manage your finances, consider consulting a financial advisor or credit counselor. They can provide guidance and strategies to improve your financial situation.
4. Avoid further debt: If you are borrowing to maintain your lifestyle you are digging a hole for youself by exposing yourself to higher costs of interest down the road.
5. Increase Income: Explore opportunities to boost your income through part-time work, freelancing, or side hustles.

The impact of inflation on household finances is undeniably challenging, but with careful planning and responsible financial decisions, it’s possible to weather these tough times and secure a more stable financial future.

The proposed amendments to the Income Tax Act put forth by the National Treasury mark a significant shift in the taxation landscape for remote workers in South Africa. Under these amendments, Foreign Companies that employ South African individuals for remote work will be required to comply with the PAYE (Pay-As-You-Earn) system, UIF (Unemployment Insurance Fund) contributions, and the Skills Development levy. This move carries notable implications for digital nomads and remote workers.

More admin issues

Digital nomads, who often choose locations for their lifestyle and work flexibility, could face substantial changes in their financial circumstances. The implementation of PAYE means that their taxes would be deducted at source, potentially leading to higher tax deductions. Additionally, complying with UIF and Skills Development levy requirements might add administrative burdens for both the workers and the employing companies.

More tax issues

From an economic perspective, these amendments could yield both positive and negative outcomes. On one hand, the government could see an increase in revenue as previously untaxed income is now subjected to taxation. This could potentially contribute to local funds and government programs. On the other hand, there’s a risk that some digital nomads might decide to leave the country in search of more tax-friendly or administratively convenient alternatives, leading to a potential loss of skilled individuals.

More legal issues

Moreover, there’s the matter of terminating employment for remote workers. The legalities surrounding employment termination can be intricate and differ from country to country. Foreign Companies might face challenges in understanding and adhering to South African labor laws when it comes to remote workers.

Revenue verses skills

In conclusion, the proposed amendments to the Income Tax Act reflect a significant attempt to adapt taxation policies to the evolving landscape of remote work. While they have the potential to increase government revenue, they also pose challenges for digital nomads and remote workers, from higher tax deductions to administrative complexities. The impact on the economy will depend on how effectively these changes are implemented and whether they strike a balance between taxation and retaining a skilled workforce.

Over the years, women have made remarkable advancements in various fields, including education, careers, and entrepreneurship. However, certain financial disparities still persist, such as the gender pay gap and a higher likelihood of interrupted careers due to caregiving responsibilities. These factors can impact women’s long-term financial security, making it crucial for women to have a strong grasp of financial concepts and strategies.

Financial Literacy among Women:

Financial literacy refers to the ability to understand and effectively manage personal finances. Studies suggest that women, on average, tend to have slightly lower financial literacy scores compared to men.

However, it’s important to note that financial literacy is not solely a gender-specific issue. It affects people of all genders and backgrounds.

Some ways to improve Financial Literacy

Education

Providing comprehensive financial education is key. Schools, community centres, and workplaces can offer workshops and courses that cover basic financial concepts, such as budgeting, saving, investing, and retirement planning.

Online Resources

The internet offers a wealth of free resources. Women can access online courses, articles, videos, and podcasts to learn about personal finance at their own pace.

Role Models and Mentors

Women can seek out successful female role models in finance and business who can share their experiences and insights. Mentoring relationships can provide valuable guidance and encouragement.

Open Conversations

Encouraging open discussions about money within families and social circles helps break down taboos surrounding finances. When people share their experiences, challenges, and lessons learned, it fosters a supportive environment for learning.

Professional Financial Advice

Consulting with financial advisors can provide personalised guidance tailored to individual circumstances. Financial advisors can help women set goals, create financial plans, and navigate complex financial decisions.

Networking Groups

Joining women’s networking groups related to finance and entrepreneurship can provide a supportive community where women can share knowledge, experiences, and opportunities.

Start Early

It’s essential to start learning about financial planning early in life. Schools and parents can play a significant role in instilling healthy financial habits from a young age.

Regular Assessment and Adjustment

Financial situations change over time. Regularly assessing financial goals and adjusting plans as needed ensures that women stay on track to meet their objectives.

National Women’s Month serves as a reminder of the progress made and the challenges still faced by women in various aspects of life. Empowering women with financial literacy is a critical step toward gender equality and overall well-being. By advocating for comprehensive financial education, fostering open conversations, and providing access to resources and support, we can collectively work towards improving the financial literacy of women and ensuring they are equipped to make informed and confident financial decisions.

Research

Here are some research-based facts regarding financial literacy for women:

Gender Gap in Financial Literacy: Studies have consistently shown a gender gap in financial literacy. According to a global survey by the OECD, women tend to score lower on financial literacy assessments compared to men. This gap is observed across different age groups and countries.

Impact of Education: Research indicates that higher levels of education are positively correlated with improved financial literacy. However, despite women’s increasing educational attainment, the gender gap in financial literacy persists.

Retirement Readiness: A study by the Employee Benefit Research Institute (EBRI) found that women are generally less confident about their retirement savings than men. Only 22% of women surveyed were very confident about having enough money for a comfortable retirement, compared to 36% of men.

Investment Knowledge: Women often display lower levels of confidence and knowledge about investing. A report by Sallie Mae found that women are less likely to invest and tend to hold more of their savings in cash compared to men.

Longevity and Financial Planning: Women tend to live longer than men, and they also have a higher likelihood of being single in their later years due to factors such as widowhood or divorce. This makes financial planning for retirement and long-term care especially important for women.

Pay Gap’s Impact: The gender pay gap can have long-term consequences on women’s financial security. Lower earnings can lead to reduced retirement savings and Social Security benefits, ultimately affecting women’s overall financial well-being in retirement.

Caregiving and Career Interruptions: Women are more likely to take on caregiving responsibilities, which can lead to career interruptions. These interruptions can impact their earning potential, Social Security benefits, and retirement savings.

Lack of Confidence: A study by Financial Finesse found that women often express lower levels of confidence in their financial decision-making abilities compared to men. This lack of confidence can lead to avoidance of financial matters or reluctance to engage in investment activities.

Interest in Financial Education: Despite the challenges, women are interested in improving their financial knowledge. A report by TIAA-CREF Institute found that women express a strong desire for financial education and seek guidance on topics like investing, retirement planning, and debt management.

Financial Advice: Research suggests that women are more likely to seek financial advice and consult professionals when making financial decisions. This indicates a proactive approach to improving financial literacy and making informed choices.

These research findings highlight the importance of addressing the gender gap in financial literacy. By providing targeted financial education, promoting confidence in financial decision-making, and addressing specific challenges faced by women, we can work towards closing the gap and ensuring that women are well-equipped to manage their finances effectively.

A recession is a period of economic decline where businesses don’t do as well, leading to fewer jobs, and people struggling to make ends meet. It’s characterized by a decrease in the total goods and services produced (GDP), increased unemployment rates, and overall financial hardship for individuals and businesses alike. The high rate of inflation globally and locally is threatening us with a recesion.

Here are three problems that may affect personal finance if an economy is in a recession:

Job Loss or Less Money Coming In

During a recession, some companies may need to save money, so they might lay off workers or give them less pay. This means people can lose their jobs or earn less money, making it harder to pay bills, save for the future, or invest in things.

Trouble with Borrowing Money

In a recession, it can be tough to borrow money from banks or lenders. Some people might rely on credit cards or loans to get by, but if they can’t pay them back, their credit score can get damaged. This makes it even harder to borrow money in the future. Having too much debt can also make it tough to save money or invest.

Asset Values Going Down

During a recession, the things we own, like stocks, bonds, and real estate, might lose their value. This can make people’s overall wealth go down. It’s especially hard for those who were counting on these assets for their retirement savings or long-term financial goals. If they have to sell these things, they might have to do it at a loss, which means they won’t get as much money as they hoped.

Gold is often considered a better investment in times of high inflation due to several key reasons:

Inflation Hedge

Gold has historically acted as a reliable hedge against inflation and the Rand. When the general price level of goods and services rises, the value of fiat currencies decreases, leading to a loss in purchasing power. Unlike paper currencies, gold’s intrinsic value is not directly linked to any government or central bank, making it less susceptible to depreciation during inflationary periods. As a tangible asset, gold tends to maintain its value or even appreciate in real terms, offering investors a way to preserve their wealth.

Safe Haven Status

During economic uncertainty and rising inflation, investors often seek safe-haven assets to protect their portfolios from market volatility. Gold is widely regarded as a safe-haven asset due to its long-standing history of being a store of value. Inflation erodes the value of other investments, such as stocks and bonds, making gold an attractive alternative as it exhibits less price volatility during turbulent economic conditions.

Limited Supply

Gold’s scarcity contributes to its allure as an inflation hedge. The supply of gold is relatively finite, and its extraction is costly and time-consuming. Unlike fiat currencies that can be printed in unlimited quantities by central banks, gold cannot be manufactured at will. This scarcity factor helps maintain its value and drastically prevents excessive inflation from impacting gold prices.

Where to invest

You can invest directly in gold mining shares. You can buy and hold gold coins such as Kruger Rands through an exchange. You can also invest directly in an exchange-traded fund which tracks the performance of gold at a very low cost.

Some basic principles apply to successful investments.

Study your investments

 Before making any investment, conduct thorough research and analysis. Study the market trends, historical performance, and financial health of the companies or assets you’re considering. Utilise tools like fundamental analysis to assess the intrinsic value of stocks or assets. Additionally, keep yourself informed about economic and geopolitical events that might impact your investments. Making well-informed decisions based on data and insights is crucial for long-term success.

Spread your investments

One key strategy for making wise investment choices is to diversify your portfolio. Instead of putting all your money into a single investment, spread it across various asset classes, industries, and geographic regions. This helps mitigate risks as different investments may perform differently under various economic conditions. By diversifying, you’re less likely to experience significant losses from the underperformance of one investment, while other assets may still yield positive returns.

Stay with your investments

Patience is a virtue when it comes to investing. Rather than chasing short-term gains, focus on long-term goals and hold onto your investments for extended periods. This approach allows you to ride out market fluctuations and benefit from compounding returns. Long-term investments have historically been shown to outperform short-term trades, and they provide more stability and reduced transaction costs. Remember, successful investing requires discipline, a clear strategy, and the willingness to stay committed to your chosen path.

In the universe of financial planning, there are so many aspects to consider which often leads to oversights or missed opportunities which affects the effectiveness of the plan.

Here are some common areas which tend to be overlooked.

Not nominating a beneficiary on your pension fund benefits

The pension fund is regulated in such as way that the beneficiaries are decided upon by the trustees of the fund. They have the responsibility of ensuring that any dependents left behind at your death after considered as beneficiaries. You should ensure that the beneficiaries you wish to benefit from your fund are at least recorded on your fund to include them.

Not Including your RA contributions in your PAYE deductions

Retirement annuity contributions are deductible against your taxable earnings to certain limits. Instead of claiming at the end of the year on your tax return, you could have the contributions deducted monthly thereby improving your take-home pay every month instead of waiting for the refund at the end of the tax year.

Nominating a child as a beneficiary

Children under the age of 18 years are minors and do not have the legal capacity to enter into a contract or sign up for bank accounts, investments or other financial instruments. Nominating a child as a beneficiary therefore can create problems with the proceeds you wish them to benefit from. Policies with children as minors are generally taken over by their legal guardians. If there is no will which directs the proceeds to a trust the proceeds could end up in the Guardian Fund until the child reaches 18 years old. 

Not signing your will correctly

A will needs to be signed absolutely correctly to be valid. Two witnesses who are not beneficiaries, guardians, or executors in the will are required to sign having actually seen you sign the will. They have to be of sound mind and capable of testifying in court being at least 14 years old. The will is also not valid if a witness has a spouse who is a beneficiary in the will. These and many other oversights impact the effectiveness of your financial plan.

Be very aware and seek advice if you are not sure. 

There are some distinct benefits to reaching financial independence.

It’s the stage where your financial provisions can maintain your lifestyle without relying on a payroll. 

Financial Independence has some distance benefits:

Freedom and Flexibility: 

Financial independence grants you the freedom to make choices without being constrained by financial obligations. You can pursue your passions, take risks, and explore opportunities without worrying about monetary limitations. This flexibility allows you to design a life that aligns with your values and aspirations.

Reduced Stress and Peace of Mind: Achieving financial independence brings a sense of security and peace of mind. You can focus on personal growth, health, and relationships without the constant worry of meeting financial obligations. The absence of financial stress can improve mental and emotional well-being, contributing to a happier and healthier life.

Early Retirement or Career Shift: 

Financial independence enables you to retire early or transition to a career you genuinely enjoy, rather than staying in a job solely for financial reasons. This provides the opportunity to spend more time with loved ones, travel, engage in hobbies, or even give back to the community through volunteering or philanthropy.

The way forward:

Live within your means:

As a rule, income needs to cover your cost of living and include savings for your future financial independence. Unless you win the lotto or inherit and large amount you will never be financially independent without saving. A key measurement in your financial planning is the percentage of your income spent on debt compared to your allocation to savings. A healthy balance is 30% debt and 30% savings, leaving you with 40% for living expenses. You basically are living above your means if you are borrowing more and saving less. Yes, the house and the car are above your pay grade if you are spending more on them than your savings. 

Increase your income:

You can fast-track your future financial independence by finding ways to increase your income. Side hustling with the determination to save the extra cash and not use it to improve your lifestyle needs. 

Save first then spend the rest:

Committing to your savings at the beginning of the month is a far more successful strategy than trying to save what might be left over at the end of the month. You effectively build a realistic cost of living with the peace of mind that you are on the road to financial independence.