Upgrade your budget for long-term wins

Many South Africans believe that investing for the long term requires a dramatic jump in income. But in reality, smart investing is often less about earning more, and more about being disciplined with  what you already have. 

In this sense, a budget is so much more than a record of expenses; it’s a tool that shows you where your money could be working harder.

Small, intentional adjustments to your monthly spending can free up meaningful amounts to invest in a retirement annuity (RA) or tax-free savings account (TFSA), without feeling like you’re giving anything up.

Small changes, big impact

When people think about saving, they often imagine cutting out all discretionary spending. But meaningful progress doesn’t require extreme measures. In many cases, freeing up investment money comes from rethinking your habits rather than eliminating enjoyment.

For example, cancelling a rarely-used streaming subscription worth R200 a month, or reducing takeaways by just one meal a week, can easily unlock R300 - R500 monthly. By redirecting that money into an RA or TFSA each month – even if it’s just a few hundred rand – you can start building long-term financial security in a way that aligns with your current lifestyle rather than competing with it. 

It may seem insignificant at first, but over time, these contributions can grow significantly due to the power of compounding.

How an RA turns small habits into long-term value

For self-employed individuals, freelancers and those without employer retirement benefits, an RA is a powerful tool for turning everyday financial decisions into long-term protection. Contributions are tax-deductible up to 27.5% of taxable income, capped at R350 000 per year, meaning your reallocated savings can reduce your annual tax bill as well as build your retirement fund.

The investment growth within an RA – interest, dividends and capital gains – is tax-free, helping your money compound faster.

And because RAs are designed for long-term preservation, they also offer estate planning advantages and creditor protection, ensuring your retirement savings remain secure even if you face financial challenges.

TFSAs: flexible growth for future goals

A TFSA offers a simple and accessible way to start investing. You can contribute up to R36 000 per year, with a lifetime limit of R500 000, and all growth is completely tax-free. Contributions in excess of these limits will be taxed at 40%.

TFSAs are not subject to Regulation 28, which means you can choose a mix of investments that suits your risk profile and time horizon without the restrictions associated with retirement funds. They also offer full access to your funds at any time – though withdrawals permanently reduce your lifetime contribution limit, so planning is essential.

A TFSA is ideal for savers who want flexibility while still building long-term value. Upgrading your budget by redirecting some of your it into a TFSA can help you fund future milestones such as education, a deposit for a home, or a bucket list travel goal – all without compromising your lifestyle today.

Empowerment through intention, not restriction

Financial control doesn’t come from deprivation; it comes from clarity. By reviewing your budget through a strategic lens, you can identify areas where small changes create meaningful opportunities - the goal is not to restrict but to optimise.

A qualified financial adviser can help you understand how to balance these small adjustments with long-term investment strategies, ensuring each decision contributes to your broader financial goals.

Author: Thomas Berry, Head of Sales at PSG Wealth