Amendments to the Pension Funds Law aim to bring financial relief to over-indebted consumers via the Two-Pot Retirement System. However, some consumers who do not need the money may be tempted to withdraw funds. The Gauteng Office of Consumer Affairs urges consumers who can survive financially not to make withdrawals from their pension or retirement funds.
“Consumers should understand that saving for the future is still important, therefore, they should avoid withdrawing the money for wants, such as a holiday trip, fancy clothes, and so forth”, says Ms Milly Viljoen, Director of Consumer Education and Awareness at Gauteng Office of Consumer Affairs. According to the latest Savings Index of the Gordon’s Institute of Business Science, only two out of 10 South Africans have a culture of saving and are not putting away enough for the future. Thus, It is imperative to consult a financial planner/advisor for expert advice before considering withdrawing money from your savings pot.
July is the National Savings Month in South Africa, and consumers are encouraged to save and invest more. Saving money is a vital aspect of financial responsibility that should not be neglected. Consumers are encouraged to adopt a culture of saving, and then invest money to either boost an emergency fund or create wealth. Mostly, over-indebtedness comes as a result of failure to budget and differentiating between needs and wants, says Viljoen.
Credit is expensive as it comes with extra costs such as interest, monthly service fees, and credit life insurance. Therefore, it is crucial to save for future emergencies, and for luxuries to avoid over-indebtedness. Less amounts of savings lead to increased reliance on debt, low disposable income and lower savings. These are some of the direct causes of over[1]indebtedness. The key is to begin with a small amount and gradually increase it. No matter how insignificant it may seem, every rand saved counts.
Consumers are urged to avoid being victims of scams by verifying the legitimacy of the investment companies before they invest their monies. Financial Service Providers that are legitimate are registered with the Financial Sector Conduct Authority (FSCA), therefore, consumers can contact the FSCA, www.fsca.org.za to verify the information. The Gauteng Office of Consumers receives complaints regularly from consumers who have been scammed by fake suppliers of goods and services. Losing money while saving it can be more stressful to consumers, adds Viljoen.
The Gauteng Office of Consumer Affairs was established under the Gauteng Department of Economic Development to protect and promote consumer rights. For more information and consumer-related complaints, contact (011) 355 8006 or email consumer@gauteng.gov.za.
Below are Savings tips that are provided by Ms Viljoen:
Draw a ‘realistic’ budget. A budget is a great way to track your spending and to ensure that you focus on needs, and avoid wants. This lets you focus on what is important, reduces the chances of overspending, and lets you save as planned.
Tackle your debt. Create a plan for eradicating your debt, especially high interest-bearing debt such as credit and store cards. Pay off the smaller debt first and then use half of the amount you would have paid toward that debt to start your savings plan. Use the other half of the amount to pay towards the next debt to settle.
Start small. Put as little as R100 a month towards a savings plan. Do it on your own or join a reputable Savings Stokvel alternatively, contact a licensed/ registered financial advisor @ www.fpi.co.za to assist you with a savings/investment plan.
Shop around for the best deals. Compare prices between different stores and online retailers to save money. Suppliers of goods and services may charge different prices for the same product or service.
Credit is expensive. Learn to save to avoid applying for credit during emergencies. Credit comes with extra costs that lead to overspending and may result in poor credit records and over-indebtedness.
The Gauteng Office of Consumer Affairs
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