Salary allocation advice (graduate)

From the start, learn to save at least 15% of your salary towards retirement.. you are not obligated to save that entire 15% to just your employers fund.. you can save some of it to a RA of your choice as well..

Learning to save from the start and living only off of what's left after savings, will go along way in setting you up good for the rest of your life..

Also consider building a rainy day fund, to always be kept at at least 3 times whatever your monthly salary is..
 
Hey @RedlineRacer,

In my own personal experience, it all depends on your financial needs and how much you're willing to sacrifice each month. If you are still living at home with minimal expense then put as much as you can into it as it's forced savings and you won't be able to touch it unless you leave the company (also consider your possibility of moving out in x months/years if you are still at home).

Another added benefit of a higher %age is if your company matches your contribution to the provident fund (usually up to a certain %age), so the higher the %age the more money going into it - HR/payroll will be able to tell you these details and clarify further as how your company operates on this level.

Regarding calculating based off of basic salary versus total package, never been in a company that offers a choice on this so quite interested to know what you find out and what are the benefits/drawbacks to both.
 
WAslayer said:
From the start, learn to save at least 15% of your salary towards retirement.. you are not obligated to save that entire 15% to just your employers fund.. you can save some of it to a RA of your choice as well..

Learning to save from the start and living only off of what's left after savings, will go along way in setting you up good for the rest of your life..

Also consider building a rainy day fund, to always be kept at at least 3 times whatever your monthly salary is..
Click to expand...
I considered mentioning this as well but, pretty solid advice from WAslayer! Nothing is stopping you from getting your own Retirement Annuity (RA).
 
lukekay said:
Hey @RedlineRacer,

In my own personal experience, it all depends on your financial needs and how much you're willing to sacrifice each month. If you are still living at home with minimal expense then put as much as you can into it as it's forced savings and you won't be able to touch it unless you leave the company (also consider your possibility of moving out in x months/years if you are still at home).

Another added benefit of a higher %age is if your company matches your contribution to the provident fund (usually up to a certain %age), so the higher the %age the more money going into it - HR/payroll will be able to tell you these details and clarify further as how your company operates on this level.

Regarding calculating based off of basic salary versus total package, never been in a company that offers a choice on this so quite interested to know what you find out and what are the benefits/drawbacks to both.
Click to expand...
Thanks! I unfortunately have to move to another city so I've got quite a bit of expenses. Is the norm for other companies to calculate it based on total remuneration package?
 
WAslayer said:
From the start, learn to save at least 15% of your salary towards retirement.. you are not obligated to save that entire 15% to just your employers fund.. you can save some of it to a RA of your choice as well..

Learning to save from the start and living only off of what's left after savings, will go along way in setting you up good for the rest of your life..

Also consider building a rainy day fund, to always be kept at at least 3 times whatever your monthly salary is..
Click to expand...
Thanks for this. Saving outside of the employer's scheme is definitely something I'm planning to do. I was thinking of contributing the minimum through my employer (12.5%) and then saving the rest through external vehicles.
 
RedlineRacer said:
Thanks! I unfortunately have to move to another city so I've got quite a bit of expenses. Is the norm for other companies to calculate it based on total remuneration package?
Click to expand...
Ahh okay then it's purely a what can you afford to spare and are you willing to sacrifice to save the maximum. To be honest I am not sure, I just had a look at my payslip and it doesn't seem to clarify if it's based off total remuneration or base salary. I suspect it's based off the base salary or cash component as some companies state. HR will have more info on this as I am sure it's a common question.
 
lukekay said:
Ahh okay then it's purely a what can you afford to spare and are you willing to sacrifice to save the maximum. To be honest I am not sure, I just had a look at my payslip and it doesn't seem to clarify if it's based off total remuneration or base salary. I suspect it's based off the base salary or cash component as some companies state. HR will have more info on this as I am sure it's a common question.
Click to expand...
Gotcha, thanks so much for the advice!
 
RedlineRacer said:
I am a recent graduate and I just got my first job, so I don't have much experience.


Does anyone have any tips or advice to spare me with this, or anything I should consider in making a decision ?
Click to expand...

Well done.

The rule is "pay yourself first" so make your contribution to your (future) self as high as possible and as soon as possible.

For example, if you earn R 30k per month, paid on the 25th, have a system whereby you transfer R 30k to (interest-bearing) savings on the 25th.

Then if you have rent of say R 8k transfer that from savings on the 29th.

You can send up to 27.5% of income to a provident/RA fund, which is about R 8.25k in our example.

If your company contributes, bear in mind the buck stops with you, so if there's a shortfall (e.g. they contribute R 4k) you have to pick up the slack and contribute the other R 4.25 k.
 
Tomtomtom said:
Well done.

The rule is "pay yourself first" so make your contribution to your (future) self as high as possible and as soon as possible.

For example, if you earn R 30k per month, paid on the 25th, have a system whereby you transfer R 30k to (interest-bearing) savings on the 25th.

Then if you have rent of say R 8k transfer that from savings on the 29th.

You can send up to 27.5% of income to a provident/RA fund, which is about R 8.25k in our example.

If your company contributes, bear in mind the buck stops with you, so if there's a shortfall (e.g. they contribute R 4k) you have to pick up the slack and contribute the other R 4.25 k.
Click to expand...
Thanks!
 
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