22 June 2026
Preaching is Easier than Practicing
- James Guimaraens
My eldest son, Sebastian, recently joined the ranks of the employed, having qualified in 2025. I was now faced with the reality of helping him make sense of the frankly overwhelming number of important decisions ahead of him: medical aid, life cover, retirement savings, financial management, and budgeting.
22 June 2026
Preaching is Easier than Practicing
- James Guimaraens
My eldest son, Sebastian, recently joined the ranks of the employed, having qualified in 2025. I was now faced with the reality of helping him make sense of the frankly overwhelming number of important decisions ahead of him: medical aid, life cover, retirement savings, financial management, and budgeting.
Insights
Complexity
The process was rigid when I started my first job. Medical aid, retirement fund, and life insurance were part of my employment conditions, and there was no flexibility. There was no choice of medical scheme options, no loyalty programmes, no bells and whistles. I signed on the line, and my first salary was nett of all the deductions.
For Sebastian, just transitioning across from my Discovery membership to his own involved multiple discussions and debates. Endless options for consideration, and then we still had to navigate gap cover and Vitality. I was grateful for the professional advice of our medical aid broker, Rudi Clayton, and the relief of dealing with a person for all the related documentation. This was only one item on the list.
Investing, Budgeting and Essential Expenses
Working through a rudimentary budget of expenses, it was quite a revelation to see how quickly his income evaporated with essential expenses. There was nothing left for savings. It’s difficult to preach the importance of long-term investing if there is nothing available to invest. This is the reality of the majority of South Africans but is also a global crisis.
Why Save?
Financial independence relies on consistency in your financial behaviour over a lifetime of earnings. It requires discipline, and no immediate reward; not easy, in this world of immediate gratification.
For Sebastian, it’s not possible to save any meaningful amounts now, but I needed to try and communicate why he needed to save. “For retirement” is too generic. Whether you “spend” your money on material items, life experiences, or investments, there is always a reason. If you are planning an overseas trip with friends, you have a clear goal. You know what you need to save and you will plan to reach that goal.
The same applies to investing – the objective needs to be clear. It may not be immediately achievable, but like any meaningful accomplishments in life, you have to set a goal. Then you work towards it.
Spending on Financial Independence
It always amazes me how many people gladly spend large amounts on cars, houses and lifestyle choices, but any discussion around “investing” results in immediate boredom and a change of topic. For most people, investing is boring, frustrating, overwhelming and has no immediate reward. They don’t understand what they are “buying”. For Sebastian, I needed to approach the topic from a different angle.
If you want to buy future financial independence, you need to spend, just like any other expenditure. Current budgetary constraints don’t allow for it, but if he finds himself in the privileged position of having a more flexible budget, then it becomes an essential item that must be prioritised.
The following table provided an idea of what he can buy with a monthly expenditure of R 1,000.00 towards an investment in financial independence.
Age – R 1,000 pm | R’s at 60 – nominal | R’s at 60 – inflation-adjusted | Monthly income @ 60 – real |
25 | R 5,420,741 | R 1,083,844 | R 5,000 |
30 | R 3,150,590 | R 797,266 | R 3,700 |
35 | R 1,787,604 | R 572,725 | R 2,700 |
- I assumed inflation at 5% per annum, and a real return from the investment of 5% above inflation.
- I assumed contributions increased by 5% per annum to keep up with inflation.
We spent some time working through different cashflow scenarios, but the purpose of the above table was to provide a “shopping list” of what he could “buy” with his monthly savings allocation.
- Deferring your savings strategy by 10 years, halves what you can “buy” with your savings.
- Inflation is a pervasive and dangerous foe. Using a 10% annual return results in an impressive R 5,420,741.00 over 35 years, but the true value of the investment is R 1,083,844.00 in spending power.
- If we assume a more realistic start date of saving from age 30, then R 1,000.00 per month “buys” a monthly income of R 3,700.00 per month from age 60. It’s less than you would expect, after considering inflation.
Why do I need this?
Behavioural finance is a widely researched topic and there are many fascinating books and social media channels dedicated to this complex topic. When we are faced with offering this guidance to our own family, you have to distil the issues down to a level that makes sense to that specific personality. The majority of people are not interested in the topic.
We all have widely differing budgeting priorities, but ultimately, we are all faced with the same question; why do I need this? Whether it’s a coffee machine, cell phone, car, insurance, medical aid, the debate will always be the same, and different individuals prioritise these decisions based on relatively unique personal criteria.
Saving and investing are no different. There must be a purpose, a goal, and a plan to reach that goal. Importantly, they must be achievable.
