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As parents/guardians, our goal is to ensure that we prepare our children for a bright and prosperous future. A good place to start is ensuring that they have access to a good education — something that has become increasingly expensive.
The February 2024 Consumer Price Index from Stats SA showed that the cost of education increased by more than 5.7% in 2024 when compared to the same period in 2023. Data from Old Mutual projects that primary school fees will skyrocket to R41 900 by 2030.
All these numbers mean that funding your child’s education will likely become a costly affair, and parents need to save more aggressively to keep up with the rising costs. Fortunately, a tax-free savings account can help you reach your education savings goals.
An Absa Tax-free Savings Account (TFSA) account enables you to save from as little as R1 000 while building up to your annual contribution of R36 000 per tax year. With this account, you can also earn additional interest with Absa’s Digital Bonus Rate when you open and transact digitally on any of Absa's digital channels. Alternatively, you can also open a Tax Free Fixed Deposit Account that requires a minimum lump sum of R30 000 and a maximum of R36 000 fixed for 12 months.
How it works
Unlike other savings instruments that could be subject to income tax above a certain threshold, interest earned a TFSA is exempt from taxes. Apart from not being taxed on your savings, a TFSA also offers you a little added extra in the form of compound interest. The longer you save, the more your total interest builds.
The benefits
The maximum amount you can contribute is R36 000 per tax year and R500 000 over the course of a lifetime. (Any further contributions will result in a 40% penalty that must be paid to SARS).
Best of all, if you have children, you can open an account in each child's name to give them the financial start they deserve and use their yearly contribution to fund their investments while they are still children.
How to get started
One of South Africa’s leading banks, Absa, offers a variety of TFSAs that can help you get started. To open a TFSA with Absa all you need is R1 000, and you can do additional deposits to your savings whenever it suits you to reach the R36 000 per tax year. Alternatively, you can also open a Tax Free Fixed Deposit account that requires a minimum lump sum of R30 000 and maximum of R36 000 fixed for 12 months.
Open an Absa, TFSA that suits your savings goals today on the following channels:
- Speak to one of our dedicated Savings and Investments Agents on 0860 111 515; or
- Visit any Absa branch.
- All you need is your South African ID and proof of residence not older than three months to open an account.
Visit absa.co.za/taxfreesavings to find out more about Absa’s tax-free Savings Account.
This post was sponsored by Absa and produced by Studio24.
