A Fin24 reader asks:
I am 25 years old and would like to start saving. Would you
recommend that I pay off my debt before I start?
Prem Govender, chairperson of the SA Savings Institute,
responds:
It is always good to start saving consistently from the day
you get your first job. During this period, make sure that you learn the magic
of compound interest.
Please put aside at least 15% of your income every month in
a safe investment. Use credit sparingly. It is cheaper to wait until you have
saved the funds yourself.
If you are in debt, pay it off as soon as possible and cut
out your credit and store cards.
This is because it is better to spend money you have earned
than spend the money you still have to make. Remember, cuts in interest rates
should be used to settle debt first and not to take on more debt.
- Fin24