With only a few more months left of the year, South Africans should already be thinking about saving for the festive season, ‘Januworry’ and even beyond – particularly with temptations like Black Friday on the horizon and our tendency to splurge our year-end bonuses before they even hit our accounts. With this year’s Vat increase impacting our pockets – not to mention petrol and diesel prices rising by 12% and 11% since the beginning of the year (with further increases expected) and electricity costs increasing by 3.1% since June last year and water by 7.1% – thinking ahead is more important now than ever.
If you aren’t earning much, the idea of saving money might seem impossible, but even putting aside as little as R5 a week can make a difference in the long run. Saving is easier than you think. With a simple shift in habits, you can have peace of mind knowing that you can afford necessities and have funds available in case of emergency. Plus, if you stash your cash in the right places, you can even make your life goals reality.
Tips for becoming savvy saving:
Start by setting goals
If you’re wondering how much you should save, start by setting some short-, medium- and long-term goals, with realistic timelines to achieve them by. Next, work out how much you would need to save each month for them to materialise within that particular timeframe.
Best get budgeting
Look at old bank statements to see where you are spending your money and which non-essential expenses, like entertainment, you can cut back on. Earmark that money for achieving the abovementioned goals and formulate a budget for your expenses, factoring in the amount to be saved.
Save before you spend
Each month, make sure you put away the amount you have committed to saving, before your debit orders go off and before you get the chance to spend it. You can even automate the process by setting up a debit order so that the money is transferred straight into your savings account, investments or retirement annuity (RA) fund.
Be more mindful of how you spend your money
Stopping unnecessary splurges can assist in your saving efforts, so draw up a shopping list before you go to the store. This can help you stick to what you need and your budget. Another habit to stop is drawing cash from banks other than your own as this incurs service charges. You should also take a look at your bank fees to check whether you are paying for services that you don’t use. If you are, you may want to move banks to get a better deal. Using apps and online tools can also be beneficial for keeping track of your spending.
Delete your debt
If you don’t pay off your debt, saving becomes much harder – particularly when you consider that for every R100 a person earns, R72 goes towards debt. Start by paying off any credit card debt first, since this incurs the highest interest rates and follow this by paying off your car and then your home as interest charged on car repayments is generally higher than that on home loans.
Get in on group savings
Being part of a group can help develop the discipline to save, particularly when one considers that more than 12 million South Africans belong to one of the country’s 440 000 stokvels and are saving R54 billion a year – enough to buy a number of South Africa’s biggest companies in cash. Stokvels are a relatively informal savings scheme run by a group of people who save a set amount each month. Each member has a turn to receive all the money collected in a particular month.
Find a financial advisor
Getting the right financial advice can save you a significant sum, as well as help you to avoid making costly mistakes. Plus, a financial advisor can come up with a holistic financial plan to help you reach your goals.
Making small, consistent changes like these will soon pay off, literally.
Peter Tshiguvho, CEO of Metropolitan Retail.