The demanding nature of the CA profession means that time is often a commodity. While the pressurised environment can start from as early as undergraduate level, this does pay off, with CAs earning an average salary of close to R500 000 per annum once fully qualified.
However, full-earning potential is only realised later in life, which can make it tricky for CA students to get their savings off the ground. And just because they work in the world of finance, doesn’t mean they don’t need financial planning.
It’s at the start of their careers that CAs are most financially vulnerable, qualifying as a chartered accountant entails a three-year B Com degree, an honours (CTA) year, three years of internship and two board exams, all completed over a roughly seven-year period. It’s a long (and expensive) haul, but a rewarding one.
Some prospective CAs study full-time, while others study part-time while completing their training contract with an accounting or audit firm. Suffice to say there’s no ‘free time’ in either option. So, anything besides working and studying inevitably gets placed on the back-burner.
CAs might struggle to save because of a cash and time deficit. It’s not through a lack of knowledge of the need to save – accountants inevitably have a very clear understanding of money and the value of building cash reserves. Their understanding of how to proactively protect the financial health of a business has plenty of ‘life lessons’ to apply to their personal finances. This includes the need for a goal-based savings approach that breaks up savings into a series of attainable short-, medium- and long-term aspirations. Like regular vacations – a must, considering the long hours spent in the office.
Having all this knowledge could make it even more frustrating for up-and-coming accountants who are struggling to put cash reserves away. Often a systematic approach can work. Young, not-quite-qualified CAs fully appreciate the value of compound interest that comes from saving while young. Take this knowledge and translate it into a practical plan, based on what you can realistically afford.
Young CAs are frequently saddled with student loan repayments, plus other unexpected costs that might come with their age and stage – like the desire to buy property, childcare expenses, mortgage repayments and more. There’s also the temptation of lifestyle creep. As you begin to earn more, your aspirations might increase, leading you into the dangerous territory of spending more than you earn. There are so many competing priorities for the income you earn that often savings end up at the bottom of the list. This means having to put away more, later.
If you are a still-qualifying CA, here are a few financial top tips:
1. No matter how small the contribution might be, your future self will thank your current self when the compound interest pays off. Set a series of granular goals and identify the best savings vehicle for each one. Your ongoing education would be a good example of a goal; in your profession, continuous professional development is a mandate.
2. Consider life cover to protect your loved ones from your student debt.
3. Invest in income protection and disability cover as your ability to earn an income is your single greatest asset.
4. Contribute to a retirement annuity or pension fund. The earlier you start, the better, irrespective of how insignificant the contribution seems.
CAs need to find ways for saving to avoid unnecessary stress later in life. By writing down your goals and attaching a savings vehicle to each one, you can make the exercise more realistic and fun. Of course, a financial advisor can also be invaluable in this process by adding objective advice and give you back the time you would have spent on crafting a plan yourself.
Madeleine van Wyk, development manager: Professional and Graduate Market at Sanlam Personal Finance.