These 3 Apps and 5 Steps will help you plan any holiday

Madrid | Spain
 (Photo:  W.Tsai)

Since air travel has become a lot cheaper in recent years, more and more people are travelling abroad, and with the likes of vacation packages for a 5 night, 7 night, 10 night all inclusive deal to almost anywhere in the world, one doesn’t even need any travel experience or company.  Package deals are great and easy ways to travel as there would be a set itinerary, so the only planning you’d need to make is for someone to take you to the airport.  Which is also hassle free nowadays with the help of Uber.  

However, if you’re anything like me and enjoy planning your own vacation and deciding when and where to go in your own time, then this article is for you.  Last spring I planned a 16 day trip around Spain from my laptop.  All you really need is 3 Apps (Skyscanner, Booking.com & Dropbox), Google Map and a credit card.

Keep in mind, if you're not planning to visit abroad, all these Apps are still as useful for domestic getaways.  Studies have shown that holidays and breaks are necessary for the well-being of the working class, and one should take these times off even if you don't believe you need it.

STEP 1

Decide where in the world you would like to go.  Open Google Map and view nearby places or use street views for specific area’s.  Street view comes particularly handy when looking for accommodation, as you should have a look at your surrounds before committing to the reservation.  You can also calculate distance with Google Maps, so you can see how far to travel between cities or even just from the Metro Stations to your apartment.

STEP 2

After you've decided on your destination, go to Skyscanner or download the App.  Enter your destination and dates and Skyscanner would search all possible flights and arrange them by price.  You can also filter by airline.  If you don’t know where you’d like to go, you can also select ‘Everywhere’ as your destination and Skyscanner would search for the cheapest flights to various destination.  There is also car rental and hotel options on the site.  

STEP 3

Once you’ve decided on your dates, go to Booking.com or download the App.  Enter your destination and dates and select the price range, accommodation type, etc.  Booking.com would then search and feed you with a list of options.  The more detailed you complete the filters, the smaller the list would become.  It is advisable to read reviews from other guests so that you don’t get fooled by the marketing material the owners have loaded.

STEP 4

When you’ve made your decisions, reserve, reserve, reserve, this is where the credit card comes into play.  Most online purchases or bookings require one to use a credit card, so if you don't have one, this might be a bit more challenging.  Keep in mind, many banks offer free travel insurance with plane tickets purchased on your credit card, which is a score.

STEP 5

All your reservations, plane tickets, accommodation, etc. would send you a mail.  Open a dropbox account and upload all your confirmations, and additional documents for safe keeping in case you loose your hard copy.  I usually scan my passport and upload that as well, just in case I loose it.  Most companies work on a digital system nowadays so it's not even necessary to print out your confirmations.

Make sure you have checked the visa requirements for your destination, and if all is in place then you are ready to go.  Happy travelling!

How to be become a Millionaire upon retirement from R25 000 saving

In our previous article (I need R16 Million to survive retirement) we spoke about how you should go about doing the calculations to see how much you need to have saved to survive your retirement when the time comes.  The result was grim for most of us, and since we don't want this blog to only be the bearer of bad news, we are going to tell you how saving R25 000.00 over 5 years (R5 000.00/year) will give you over R1 Million upon retirement.

The secret is a little thing called compound interest.  Compound interest is interest that builds onto your initial deposit plus the previous interest earned.  In short it is interest on interest.  Compound interest will allow your savings to grow faster than that of simple interest.  

For example, your interest rate is 1 bunny for 1 bunny.  With compound interest on 1 bunny, you will get 1 bunny interest, and you add it to your current bunny making it 2 bunnies, and there after you will get interest on that.  Where as with simple interest, you get interest on the amount of bunnies from your initial (principal) deposit.  In this case, your interest would be 1 bunny every time.

Now moving away from bunnies and to money value.  Below, I have illustrated that if you save R5 000.00 each year from age 24 to 28 (5 years), and thereafter nothing until 65 when you will retire.  With a 10% annual compound, you will have R1 141 786.00 in your savings account.  We have in the previous article clarified that, that would not be enough, however you can image what your savings could be if you were to continue saving at the same rate.  Keeping in mind, the earlier you begin saving, the better.

If you are interested in knowing what you need to save and what you would like your outcome to be.  Provide me with your age and monthly deposit amount, and we will assist you in doing the calculation.  Mail us at:  mailtheworking@gmail.com

I need R16 Million to survive retirement

A couple of years back, one of my colleagues had asked me if I had a retirement plan, and to her surprised I didn't and had actually never given it any thought until that point.  I was in my 20’s and retirement felt like an eternity away.  Finding me completely irresponsible, she then followed by asking me where I was planning to get money from once I stopped working, and I had no answer for her.  I guess at that age, I was still naive enough to believe that ‘when I grow up’ I will earn enough money to save up for retirement.  However, now that I am 30 and understand money better, I have realised that you are unlikely to be able to ‘save up’ for retirement based on an average salary.

My colleagues question had bothered me, and I had begun asking everyone I knew if they had a retirement plan of sort, and most people did.  South Africa, unlike many other countries don’t offer their pensioners much.  Upon retirement, you’re pretty much on your own.  The monthly pension from the government is a maximum of R1 500.00 (today’s money) for qualifying pensioners, with no form of medical care.  To see the criteria's to qualify for government pension, you can visit the South African Government website.  It is quite evident that any working class person would need to be able to self-sustain upon retirement. 

There are various retirement plans, and the payout upon maturity is based on your monthly contribution.  One can pay as little as R500.00 a month, however with that contribution your end payout would most likely not be sufficient to last you the duration of your retirement, which is what the brokers don’t tell you when marketing their products.  This is why after 3 years of retirement, many pensioners go back into the work force.

Example: 

Being one of the younger working Gen-Y members, you start your retirement plan at the age for 25, you would like to retire at 65 and expect to live till 80.  You would thus be contributing to your retirement for 40 years.  Each month you save R500.00, and with an 8% compound interest, your end savings is R1 745 504.00 (FNB future value calculator), which sounds like a lot of money.   However if this is your mind set, you have not done your calculations and had not taken inflation into account, and what I am about to say will shock you. 

Let’s say, based on your current lifestyle your monthly expenses are R10 000.00, and you would like to maintain the same lifestyle upon retirement.  Assuming again you are 25 and will retire at 65, living for 15 years till 80.  According to the retirement savings calculator by Southern Charter, what you would need at age of retirement to sustain you for 15 years is R16 296 607.00 (equivalent to R1 584 392.00 in today’s Rand) which is an extremely far stretch from R1 745 504.00.  To achieve this, you will need to increase your monthly contribution to R2 190.00 total.  This is of course a basic calculation, without taking any assets or liabilities into consideration.

There are various retirement calculators on the internet, that calculate different scenarios, and it is highly advisable to do this calculation in your 20's for better future planning. 

I made use of Southern Charter’s retirement savings calculator as it was easiest and most efficient for me, however below are a few other links you can make use of:

Southern Charter
Old Mutual
Sanlam
Liberty
First National Bank - Future value calculator

What are you earning and how does it measure up

At some point in our lives, we have all wondered how our salaries measured up to the people around us.  You see your friends who you graduated with getting married, having kids, buying property and travelling the world, all at the same time, yet you are still struggling to pay back your student loan.  Naturally you believe they are getting a larger salary than you, but it is impossible to actually know that unless they had told you.  And since salaries are quite a private topic for South Africans, most of us don't feel comfortable discussing it over a Saturday braai, so the question lingers and you continue being left in the dark.

This needs to change!  To be able to make better financial decisions, it is crucial to know how your salary compares to others in the same position as you.  You should know what your worth is and if you are being payed accordingly.  And if you are being under-payed, you should know what the going rate is for further negotiations either with your current or potential new employer.

In the last quarter of 2015, the estimate number of employed South Africans were 8 992 000 according to Trading Economics, making it the highest number of employment in a very long time.  The retirement age for both men and women are still 60.  The average low skilled wage is R3410.00/month, and the high skilled wage average is R19 900.00/month. 

For an indication of what your specific profession is getting paid, you can visit Payscale, to see the anonymous salary logs for various professions.  The site is quite resourceful, as one can see the logs per province, age group or years of experience, etc.