So far, we’ve looked at the big picture in money management, as shown in the calendar/table above. We then discussed how important our attitude towards money is (Attitude and belief must be linked – and what we believe deeply, determines the action we take). Considering that the red part of the calendar is so prominent, we then covered retirement. Lastly, we considered how our death has to influence how we spend our monthly money.
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Now, we want to move towards our goal of devising a working budget. Recall the SALARY/SPENDING BALANCE we discussed already:
AVAILABLE SALARY = SALARY minus COMPANY DEDUCTIONS minus PAYMENTS MADE BY YOUR BANK & OTHER FIXED PAYMENTS
The first item you see on your payslip is DEDUCTIONS. These are all the payments made from your salary, before your salary is paid to you. Some payments are proportional to your salary, so they will vary with your salary. (And your salary too may vary depending on overtime worked, or any allowances you may be paid.)
If your salary is above the threshold of R78,150 per year (that’s R6 012,50 per month, applicable for the 2019 tax year), you will pay tax to SARS.
This is unavoidable. View this as your contribution to government, so that they can provide society with the structures that make civilization possible.
For example, think of state-provided schools, the police service, and hospitals.
An unemployment insurance fund deduction (UIF) will also appear on your payslip. If you ever become unemployed, you may apply to this fund for assistance.
Many companies (especially the bigger ones) make contribution – by yourself – to some kind of retirement fund, a condition of employment. So the company could take off as much as 7% of your salary to pay to this fund. Don’t see it as a deduction; see it as in investment in your future self – in yourself as an elderly person.
There may be yet another type of deduction on your payslip. What’s a garnishee or administration order? Say you owe Shop X a sizable amount of money, and you stopped paying your monthly dues to them. Shop X can obtain a court order to compel your company to pay them before they pay you. This is a very sad situation – and one of the purposes of these blogs is to keep you out of debt you can’t manage.
Although company deductions may vary, we will treat the total as FIXED. This makes it easy for us to see where it fits into our salary/spending balance.
Finally – deductions on your pay slip are deductions from your salary. Make it your business (it is) to know what they are, and to know how you can minimise them.
Jay Pillay’s first two critical decades were spent where his first decade began – in Pietermaritzburg. After studying at ML Sultan Technikon in Durban (anyone remember that place?), he then joined the sugar industry, working in Tongaat, Durban, and Xinavane – a sugar mill village 120km north of Maputo. Oh yes – there was a brief period of unfaithfulness, when he flirted with aluminium in Richard’s Bay. Upon retirement, he and his wife Dorothy – settled in Southport.
Jay began writing about salary management (for ordinary people living on a salary) in the early 2000s. Many of his articles were published by The Ripple Effect, a Durban-based corporate newsletter. In all his writing, Jay says he attempts to emphasise the big picture in salary management: it’s not just about making it to your next payday – it’s about making it to the end of your working life. It’s not just about your working life – it’s about your retirement too. It’s not just about the cost of living – it’s about the cost of dying too. It’s not just about you as a salary manager – it’s about your dependants too.
This 16-part series is being published h
There’s a second finally. To daughter Nikki, thank you for the picture.
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