No matter how appealing the idea of a foamy cappuccino or a steaming espresso is never forget that the experience is short-lived.
By sacrificing just one cup of coffee every day, you can save enough money over time to help build a useful nest egg, especially if you stash the savings into a tax-free savings account (TFSA).
Research commissioned by Old Mutual into the financial behaviour of employed millennials found that only 44% are investing in pension or provident fund, preferring to only start putting money away for retirement late in their working lives.
Meanwhile, the 2018 Old Mutual Savings and Investment Monitor shows that 1 in 3 baby boomers have NO formal retirement fund provision.
“With a tax free savings account you pay no income tax on interest generated, no capital gains tax and no dividend withholding tax. This means your money is free to grow,” says Marius Pretorius, Head of Marketing: Retail Savings and Income Solutions.
“What also makes a Tax Free Savings Account popular is its flexibility and accessibility. You can withdraw your funds at any time with no penalties, and access them through most major financial services companies and banks.”
But it’s the affordability of a TFSA that is its best feature. “You can open a TFSA with as little as R200 with the Old Mutual Maximised Interest Fund. Plus, you can open a TFSA online, via 22seven, via phone or via your financial adviser. It’s convenient and almost effortless.
“So even if your budget is stretched tight, now is the time to jump-start a savings habit and sign up for a TFSA. If you save R500 every month this way, and grow your contribution by 5% per year, in 10 years your investment could grow to over R100 000*. You can then re-invest it towards your retirement, use it for a deposit on a home or pay for your child’s first year of university.”
Pretorius pointed out that the coffee culture has caught on in South Africa in a big way over the past few years. Earlier this year international chain Starbucks joined hundreds of coffee brewers across South Africa. Baristas are serving up beans sourced from Kenya, Brazil, Ethiopia and other exotic locations, and artfully finessing their latte art.
“Yes, good coffee is a delicious pick-me-up, but should you really be spending as much on it as you are?” he asks. “If you buy two or more cups a day, be strong, become a resistor! On International Coffee Day on 1 October, seize the challenge and start cutting down your intake – and invest the savings toward your financial security. The peace of mind, and less caffeine might just guarantee better sleep, too,” he said.