Pabelo Mashiloane presents her poem in honour of Absa Polokwane after Absa donated money to a community project in her village. She recited her poem for Absa managers in Limpopo.

Pabelo Mashiloane presents her poem in honour of Absa Polokwane after Absa donated money to the Makotse Community Project in her village. She recited her poem for Absa managers in Limpopo.

Absa launched its comprehensive financial literacy toolkit during a Savings Round Table discussion that was held today. Known as My Money My Power, the toolkit forms part of Absa’s ongoing drive towards creating a financially savvy society.

The toolkit includes a multitude of topics, including financial planning as well as growing and making the most of your money.

“The consumer needs to be empowered with knowledge to make sound financial decisions that will benefit their lives and contribute towards their financial freedom in the long term,” said Absa Chief Corporate Affairs & Sustainability Officer, Venete Klein.

She stressed the important role that media has to play in ensuring that the content of the toolkit enjoys a widespread national reach. “Since 2007, Absa has taught thousands of consumers about financial matters, and we expect to reach at least 1 million South Africans through our consumer education activities by the end of the year. During the 2010 Teach a Child to Save drive, we will be mobilising employees to teach 300 000 school children about the importance of saving,” added Klein.

There is a general lack of knowledge and interest in saving and investing among South Africans. This could be attributed to a number of factors. Among these is the fact that children are generally not taught to save early in their lives, and they take this behaviour into their adulthood.

“South Africans must strive towards saving more and owing less. We all need to start getting our money to work for us. A nation with good saving habits, contributes to the building of infrastructure.
Savings can also help finance businesses that create sustainable employment and future income, which ultimately grows the economy,” said Keith Mc Ivor, the Managing Executive for Product and Pricing at Absa Retail Bank.

Mc Ivor added “As we draw towards the end of Savings Month, we should encourage each other to save everyday, and not just on special occasions. Every cent counts. One will be pleasantly surprised to see how changing from overspending to saving a bit every month, helps one prepare for the different life stages. Imagine being able to look back and realise that, through your savings initiatives, you will be able to leave a sound financial legacy for your family.”

Highlighting the seriousness and the importance of saving, General Manager for Investments at Absa Investments, Craig Pheiffer said: “If inflation were to average 4.5%, the midpoint of the South African Reserve Bank's target inflation rate range of between 3% and 6%, the purchasing power of anyone’s money today would halve in just 15 years.”

Saving and investing needs to be structured in such a way that it can overcome the ravages of inflation in the longer term. Often people leave savings for their retirement until it is too late, not realising that they will require a huge amount of capital to retire comfortably.

“An individual that retires at the age of 65 on an annual income of R500 000 with a need for 80% of that as an ongoing salary, will need approximately R8 million to generate the required income for a comfortable retirement. In most cases, the employer Pension Fund does not reach such an amount!” said Pheiffer.

Elizabeth Lwanga-Nanziri, Chief Executive Officer of the South African Savings Institute (SASI), says: “In these times of massive job losses and low consumer confidence, entrepreneurship shines as a potential pathway for sustained economic growth and recovery. There is a need for creating both a culture and a generation of entrepreneurs and self-employment projects. Education and Financial Literacy play a key role in the development of skills and behavior patterns that will allow future entrepreneurs to start and grow businesses in a responsible and inclusive manner. The starting point is an individual’s own savings and reduced dependency on the State. The Absa financial literacy toolkit will be handy in entrenching the much desired skills in our consumers.”

The My Money My Power toolkit, which centres on the notion of “Plot, Organise, Wise Up, Explore and Reap”, could certainly become a key vehicle for realising this goal.

Makotse Project was established in 1997 by unemployed women from the rural area of Makotse village, next to Lebowakgomo.

Through Absa's investment of approximately R750 000.00 since 2004 to date; the project has contributed immensely in changing the lives of the rural people. The project reached out to approximately 83 Care Givers, 78 patients and 160 Orphans and their families through HIV/AIDS awareness, training of Care Givers as Health Specialist and caring for children by establishing the Early Childhood Centre (ECD).

This centre has been rewarded the 2nd Prize provincially at the 2009 ECD Awards. A total of 62 sustainable jobs have been created through this project.

The Absa Limpopo Choir entertained onlookers in front of the Hans van Rensburg branch in olokwane on 14 July 2010

Having a financial plan and budget will help you save smartly

July is National Savings Month and now is the best time to review your savings and investment plan. To start saving now you need to put a budget together. Gone are the days when people operate without a budget. Leaving things to chance and working without a financial plan – short, medium or long term - is a complete recipe for disaster.

Between the budget and the plan you are able to keep things in perspective and realise your goals within the desired time-frame.

“Your financial plan involves goal setting, budgeting, saving and investing, managing your assets and insurance, retirement and estate planning for now and for future. Having a plan in place can make your dreams become a reality,” says Keith McIvor, Managing Executive, Core Products and Pricing, Absa Retail Bank.

What I need to do to start saving now:

Before working on a plan for your financial future, it is wise to take a step back and look at “your attitude toward money and your situation”.

Your financial behaviour originates from your unconscious beliefs, values and attitude towards money. It is important to realise that these attitudes can affect your savings and spending behaviour. Being aware of your attitude towards money and wealth is one of the first steps in better understanding how money works and how it affects you. If your attitude towards money is a negative one, you are not likely to have very much of it, which means that the quality of your life will probably suffer as a result. However, if you have a positive attitude towards money, you can ensure that your life today, and when you are older, is comfortable and secure.

Before you start creating a budget, you need to start thinking about your financial goals. Understanding the differences between needs and wants will help define your financial direction. It is important to realise that in order to be successful you have to provide as much detailed information as possible. Ultimately, the end result will show where your money is coming from, how much there is and where it is all going.

Needs are things you require to live e.g. food, air, water, and shelter. Needs change with each season and vary with age. Wants are the extras that make your life enjoyable. Things you like to have, but that are not necessary to survive.

Ten good reasons to start budgeting:

1. A budget allows you to control your money instead of your money controlling you.

2. A budget will tell you if you’re living within your means. Hidden costs like credit card debt will be revealed because you’re living as if you have more than enough money when in fact, you should be paying off your credit card debt.

3. A budget can help you meet your savings goals. It includes a mechanism for setting aside money for savings and investments.

4. Following a realistic budget frees up spare cash so you can use your money on things that really matter to you instead of spending it on things you don’t even remember spending.

5. A budget helps your entire family focus on and strive toward common goals.

6. A budget helps you prepare for emergencies or large unanticipated expenses that might otherwise set you back financially.

7. A budget can improve the way you communicate with your family members. Done right, a budget can bring your family closer together as you identify and work towards common goals and reduce arguments about money.

8. A budget reveals areas where you’re spending too much money so you can refocus on your most important goals.

9. A budget can keep you out of debt or help you get out of debt.

10. A budget actually creates extra money for you to use on things that matter to you.

Creating a budget

Creating a budget may not sound like the most exciting thing in the world to do, but it is vital in keeping your financial house in order.

Step 1: Make a list of your monthly expenses

Use a Budget Worksheet to write down all your expected monthly expenses, including any money that you spend on entertainment and hobbies and any minimum payments that you have to make towards your debts.

Step 2: Record your total income

Calculate how much you make per month. This includes your net income on your payslip and any money that you receive from investments and other forms of residual income.

Step 3: Subtract your expenses from your income

If the end result shows more income than expenses, you are off to a good start. This means you can prioritise this excess to areas of your budget such as retirement savings or paying more on credit cards to eliminate debt faster. If you are showing a higher expense column than income, it means some changes will have to be made.

Step 4: Adjust your expenses

If your budget comes out on the negative side, you will have to look at your variable expenses to find areas to cut. The resulting figure is how much you can expect to have left after recovering all of your regular monthly expenses. If you have accurately identified and listed all your expenses, the ultimate goal would be to have your income and expenses columns equal. This means all of your income is accounted for and budgeted for a specific expense.

Step 5: Build in money for debt reduction

If you have debts, your budget should already include the minimum payments that you have to make each month. Now you need to find the money to pay back those debts. Look at your numbers again and determine where you are willing to make sacrifices to get out of debt.

Step 6: Build in your savings and investments

Now it’s time to budget money for your financial goals. Some of the questions to ask yourself include: Do I want to have an emergency fund, retirement investment or vacation savings? Survey your budget once again to find the money that you need to reach these goals. If you have a lot of debt, you may need to skip this step for a while – debt reduction should be priority number one.

Step 7: Put your budget to work

Once you have created a budget that covers all your monthly expenses and financial goals, it’s time to put your budget to the test. Try to live within your budget and see how it feels.

Step 8: Assess and assess again

An economical budget is never finished. Continue to look over your budget every month to ensure that you are not overspending. Set a date in your financial planner to do this every month.

Tips to keep your budget on track

1. Be honest about your spending habits, and you’ll end up with a much more realistic budget.

2. Don’t forget to budget for fun; budgeting isn’t about being totally deprived.

3. Don’t be afraid to change your budget; a good budget is always evolving.

4. To allow for adequate planning time, make your spending plan before the start of the month.

5. Don’t be afraid to change your spending plan, if your circumstances change.

6. No two months are exactly alike, so make a new spending plan each month.

7. Watch out for cash leakage. If withdrawals from the ATM machine evaporate from your pocket without apparent explanation, it’s time to keep better records. In general, if you find yourself returning to the ATM more than once a week or so, you need to examine where that cash is going.

8. Spending beyond your limit is dangerous. If you are spending more than you bring in it doesn’t make you an automatic candidate for bankruptcy – but it’s definitely a sign that you need to make some serious spending cuts.

9. Beware of luxuries dressed up as necessities. If your income doesn’t cover your costs, then some of your spending is probably for luxuries – even if you’ve been considering them to be filling a real need.

10. Pay yourself. Aim to spend no more than 90% of your income. That way, you’ll have the other 10% left to save for your ‘big-picture’ items.

11. Don’t count on windfalls. When projecting the amount of money you can live on, don’t include money that you can’t be sure you’ll receive, such as year-end bonuses, tax refunds or investment gains.

12. Beware of spending creep. As your annual income climbs from raises, promotions and smart investing don’t start spending on luxuries until you’re staying ahead of inflation. It’s better to use those income increases as an opportunity to save more.

Track your progress

Tracking your expenses is one of the key factors in making your budget work for you. If you do not know how much you have spent each month, you won’t be able to tell when you have overspent. Re-visit your goals and current expenses. Identify any expenses that can be reduced further to ensure you are meeting your savings objectives – e.g. consolidate debt where possible to reduce expenses. Review current savings products to ensure maximum returns. Consolidate your savings into a single solution that provides higher interest rates for bigger balances. Be disciplined about your savings – set up debit orders for your savings account

Spotting a fake email

With the increased online usage comes a higher possibility of becoming the victim of phishing or email scams.

Most Internet users are unable to tell the difference between fraudulent emails designed to steal their identities and legitimate corporate emails.

Not only are customers unable to accurately spot fake emails, they are regularly surrendering personal banking information.

The reason look-alike emails continue to fool customers is that the criminals behind them are getting much better at their craft.

Using a regular email programme, fraudsters can easily create emails that appear to come from any address they want in a few minutes.

The fraudsters often access an unlocked or unsecured PC, or a hacked online account and send an email as another user.

They can also hack into a mail server and add an unauthorised message into the mail queue.

“So be vigilant at all times if you do Internet Banking because criminal gangs are sending a lot of fake emails aimed at tricking you into giving them vital personal account details so that they can steal your money,” says Christo Vrey, Managing Executive at Absa Digital and Self-Service Channels.

Most fake emails can be spotted by their message that is “urgent” or that needs "immediate attention" or asks for personal information, like passwords or bank account numbers.

Often these emails try to make you panic by saying your bank needs to verify your identity or that your Internet security has been breached.

There will then be a link that leads to the phishing site, which looks just like the website you are used to seeing when you visit for legitimate business.

The web address on the link and the phishing websites look legitimate because they would have been copied from genuine websites.

Banks will never ask you for your account details or log-in information via email.

If you do not know the sender of an email, it is always best to simply delete the message.

If you do not know the source of an attachment, link or file, it should be deleted as well because some phishing emails put a Trojan onto your computer the second you click that link.

This programme will start to record every stroke you make on your keyboard, sending it directly to the scammers.

A message from a well established company you do business with will rarely have a link within the email message.

It will ask you to log into your account, not ask you to click the link provided.

We suggest that you use this short checklist to protect yourself against phishing attacks:

● Access your Internet Banking session by manually typing the web address into your browser and then click the logon icon.

The official URL of Absa is http://www.absa.co.za

● Keep your access information secure (account number, user number, and all PIN numbers and passwords)

● Ensure you see a lock icon either at the top of the Internet browser window or at the bottom – depending on your browser

● Install and regularly update the latest anti-virus software (Absa Internet Banking and Cellphone Banking clients qualify for free first class commercial anti-virus software for their PC or Cellphone)

● Refrain from banking at public terminals like Internet Cafes

● Only provide credit card details to reputable companies; look for the lock and key icon and security certificates when shopping online

● Change your PIN number and Password regularly

For more information, please visit the Absa website