The cost of living has put many people under pressure and the ability to save is becoming a luxury that many South Africans simply cannot afford, according to Janine Horn, Momentum financial adviser.
Susan Steward, spokesperson for Budget Insurance, said: “You can change your financial situation for the better with the very next decision you make. It comes down to proactive effort, discipline and smart money management.”
With World Savings Day around the corner on October 31, here are tips to help you get your savings on track:
1. Instead of wasting hundred and thousands of rand by not getting down to your savings, start saving now. Your future self will thank your for it.
2. Knowledge is power, so make use of the free financial explainers that are available online to get information on financial concepts and terminology as well as money tips and negotiating better interest rates.
You can also get advice from experts on how to make better money decisions.
3. Clear your financial clutter by filing all of your certificates and documents so that you have them handy when you are doing your tax returns each year.
Sars requires you to keep these documents on file for a period of five years after the return is filed. Anything older you can get rid of.
4. Create a monthly budget plan with accurate income and expense figures. You can use these three budgeting methods to help you plan your budget:
– The 70/20/10 method where 70% of your income goes to living expenses, 20% to debt payments and 10% to savings.
– The 80/20 method where 80% of your income is for needs, wants as well as debt, and 20% is strictly allocated for savings.
– The 50/30/20 method where 50% of your salary is used for needs like rent, groceries and utilities; 30% is used for wants such as hobbies, holidays, and eating out, and 20% is allocated to savings.
5. Cut down unnecessary or non-essential expenses but be smart about the expenses you cut down on. You may be tempted to cut your monthly car insurance premium and while it could bring some short-term relief, it could cost you a lot more in the long run.
6. Take a good look at how you are spending your money and if there are ways to improve your spending habits.
By making small changes like buying a less expensive brands, cooking instead of buying or carpooling, you can save a lot of money after a few months.
7. Stockpile or buying more at a lower price will allow you to stretch your rands and reduce your monthly shopping bill. Be on the lookout for and take advantage of discounts and specials.
8. Review your insurance to see if the insured market value and the value of your car has depreciated because your insurance premium should go down, too.
It’s also important to check the inventory to see if all of the unnecessary items are removed. Don’t be afraid to shop around and compare your current insurance providers to your current insurer.
9. Avoid the debt trap by reducing the number of credit cards you carry and pay with your debit card or cash.
It’s vital that you pay off your credit cards one by one and don’t use your credit card unless you can pay the monthly minimum amount due. Don’t take on higher credit limits because they will tempt you to spend more.
10. Don’t spend the money meant for savings on non-essential expenses. Rather save the money or settle any debt.
11. Start an emergency fund so you can be prepared for when life happens. You can start small but stay committed and don’t withdraw any money from the fund unless it’s a crisis.
Katlego Gaborone, a financial planner at Momentum, said that people need to have at least three months’ salary saved in an emergency fund.
12. The 10% saving goal and the 30 day rule: With this rule people need to keep 10% of their salary aside for savings and wait 30 days to decide if a luxury purchase is really worth it.
13. Bank and invest wisely by checking your bank fees carefully and look at the interest you earning on your savings. Have a look at the rewards programmes offered by your bank and take advantage of them.
You can also research what other banks are offering and other ways to invest your money.
14. Get an extra income stream by turning your hobby into a side hustle or helping friends with the marketing their businesses at commission.
15. Stick to your budget and savings goals but also be flexible for unexpected expenses.
16. Reward yourself by enjoying a well-deserved holiday but remember to set a budget for your trip to avoid repaying post-holiday debt.
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