October 31, marked World Savings Day – a day dedicated to encouraging people around the world to save money. In the US, millennials and Gen Z are winning, with 60% being more financially confident and able to save more money, compared to pre-pandemic times. The same cannot be said by their millennial and Gen Z counterparts in South Africa.
A recent poll by Budget Insurance found that 71% of respondents born between 1981 and 2003 are not able to save more money than in pre-Covid times.
And while 58% of the US respondents have managed to create new savings goals because of changes in their spending habits, and save at least $1 000 from the start of 2020 – South Africans simply have too much month left at the end of their money.
A tough economy and Covid-19’s undeniable impact has had a major effect on our ability to save. Smart changes, however, can pave the way for a moneywise future.
Here are some money habits you can adopt now:
- Budget. Drawing up a budget is the holy grail of smart money management. To draw up a budget, start with a list of fixed expenditures and other monthly deductions. Have a careful look at what you are spending your money on and identify where you might be “leaking” cash on non-essentials like take-aways, entertainment and satellite TV, as well as on essentials such as your cellphone, groceries and transport. Once you have pinpointed areas where you could be spending less, start cutting back.
- Remember, even the smallest adjustments can make a meaningful difference over the long term. Channel the extra money you have into paying off your debt faster, starting with those with the highest interest rates, first. As your debt repayments start getting smaller, you will have more and more money to allocate to your personal savings and other more worthwhile causes – such as saving for retirement planning or a deposit on a new house.
- Set a savings goal for yourself and consider saving as a non-negotiable, essential ‘expense’ on your monthly budget. Whether your goal is to put away R150 or R1 000 a month, put it in your budget and stick to it.
- Be honest about your debt obligations and your expenses so that you have a clear and realistic picture of your financial situation.
- Get creative when looking for ways to cut back on costs. For instance, you could establish lift-clubs to save money on petrol and encourage your family to switch off lights in unoccupied rooms to save cutback on electricity costs.
- Put away your credit cards. Don’t carry them around in your purse or wallet as you might be tempted to spend. Rather carry a debit card for everyday purchases and save-up for the more expensive things you want.
- Fuel, water and electricity. Budget Insurance calculated that driving smartly and working sparingly with water and electricity – through water saving faucets, energy efficient devices, switching off non-essential appliances, servicing and checking your vehicle and driving smartly – could save you around R20 000 each year.
Trying times are a massive test of our financial resilience, but they also offer a great opportunity to relook the way we spend, save and invest, to make the necessary changes and to move from being in trouble, to making ends meet, to thriving – living a life where we can afford the essentials we need, the investments we should make, as well as the luxuries that we want.
Susan Steward is at Budget Insurance.