The world of personal finance is often shrouded in complex jargon and overwhelming choices. Yet one South African banking brand has managed to cut through the noise, making financial wellbeing more accessible.
When it comes to financial advice, Capitec’s philosophy is simplification. In a world drowning in financial noise — from first car loans and mortgages to retirement annuities — the first step isn’t selling a product; it’s providing clarity.
Committed to simplifying banking and financial services, Capitec launched Bank on it in partnership with Business Day. This popular video and vodcast series is hosted by renowned financial education influencer Koshiek Karan and features honest and insightful conversations with the bank’s leaders and other experts to empower Capitec clients to take control of their financial lives.
In this episode of Bank on it, Karan sits down with independent certified financial planner Johann Peens to discuss how to build long-term financial security. Peens is a board member of the Financial Planning Institute of SA and has 20 years’ experience in personal financial advisory.
“The essence of financial planning is about how to make life easier for our clients. The most important starting point for any financial plan is emergency funding. Liquidity for a rainy day, it’s a non-negotiable step before considering any big-ticket purchase or long-term investment,” says Peens.
The mistake many people make when buying a big-ticket item like a car is failing to look past the monthly payment. The interest rate is the bank’s charge for the loan. You pay the interest first before the principal amount.
When financing a car, look beyond the purchase price to the interest rate and the time period. A longer loan period makes the monthly payment smaller but results in higher total interest paid. Always aim for the shortest repayment period and put down a deposit to negotiate better rates.
Beyond managing specific purchases, it’s important to understand your overall cash flow. This is where budgeting comes in. It enables you to see how much of your income is left over (or not) at month-end. A good idea is to review your budget at least once a year.
A practical framework for allocating money, Peens suggests, is the 50/30/20 rule. This allocates 50% of your income to needs (groceries, rent/bond, school fees, transport, insurance and medical aid); 30% to wants (entertainment, socialising, non-essential spending); and 20% to investments (retirement annuity, unit trusts, tax-free savings account — and topping up the emergency fund).
Once you know what your budget allows, getting rid of debt should be a priority.
“There are two ways to get out of debt: the snowball and the avalanche method,” says Peens.
“The snowball method targets the debt with the lowest rand amount first. Once paid off, take the payment amount and add it to the next debt, creating a faster ‘snowball’ of payment.
“The avalanche method targets the debt with the highest interest rate first. This kills the most expensive debt quickest, which is statistically the most damaging to long-term wealth.”
Saving for retirement is essential for building long-term financial security.
It’s estimated that only 6% of South Africans retire comfortably. Most only have about 25% of their capital need at age 65, pushing their effective retirement age to 80. To retire comfortably, you need approximately 15 to 20 times your last annual salary.
The solution, Peens says, is to start saving as soon as possible in various vehicles (not just retirement annuities). Rather than focusing on instant gratification, focus on being prepared for retirement.
“Ultimately, financial planning is deeply personal. There is no ‘one size fits all’ answer; the strategy must be built around individual goals, dreams and the psychological relationship clients have with money.”
This episode of Bank on it offers a strategic playbook for success, revealing how Capitec leverages financial literacy and education as a core value proposition to build deep, lasting trust in a competitive market.
Watch it now:
About ‘Bank on it’
As a leading financial institution, Capitec is committed to empowering individuals and businesses. Through its Bank on it leadership series of videos and vodcast, the bank provides authentic conversations and actionable insights that help entrepreneurs and business leaders navigate the complexities of today’s market, reaffirming its commitment to financial inclusion and innovation.
New episodes of Bank on it premiere on Business Day TV (DStv Channel 412). You can also find them on the Business Day website and Business Day TV YouTube channel and Capitec’s YouTube channel and the bank’s website.
Follow the conversation and share your thoughts on social media using the hashtag #BankOnIt, and by following Capitec on Facebook, Instagram, X and LinkedIn.
This article was sponsored by Capitec.
