It’s National Savings Month and there’s a lot of talk about the generally bad saving habits of South Africans. Saving is low on the priority list and only considered, if at all, after all the money is already spent.
A recent study shows that only 20% of South Africans have some form of savings set up with a financial institution. The fact is we have a consumer culture instead of a savings culture. We stretch our Rands to make ends meet only to struggle paying the interest our debt accumulates.
It’s time to start seeing saving as a “must do” instead of an after-thought. Saving is entirely possible and doesn’t necessarily have to involve scrounging around for cash.
In a South African context, saving simply requires more effort and self-discipline. We can either hide behind complicated issues such as low employment growth, tax burdens and inflation, or we can consider taking a few basic actions to make a real difference to how we spend and save our hard earned money.
1. Cut down:
Small amounts add up and when you look again you can’t remember where the money went. A good way to start saving is to write down what you spend throughout the day to track where you can cut down. This will give you a better understanding of where you’re over spending.
You’ll be surprised to see how much money is spent on things that aren’t cost effective or can be done away with completely. One such culprit is the take away coffee. Most working people need their morning cuppa to get the day started, but do you know how much it’s setting you back?
Did you know: If you buy two take away coffees a day, five times a week, that’s roughly 40 in a month. At an average price of R13 a coffee, you’d be saving R520 every month by cutting back on just this item alone. If you buy one coffee instead of two, or make your own you can cut down your spending considerably and have some extra dough.
2. Shop wisely
Having a plan for how often, where and what you shop for can free up some extra cash every month. There is some debate about the cost effectiveness of monthly shopping as opposed to weekly shopping, but you’ll find both have their place and if planned for can save you money in equal measure.
With the exception of fresh produce, which requires weekly shopping to avoid losing money because of waste, most shopping can be done monthly. Do the bulk of your monthly shopping at a supermarket, you’ll save time and money without wasting fuel on travelling between shops.
Try avoid stopping at a garage shop out of habit. Occasionally buying bread or milk at a convenience store won’t break the bank, but remember they are generally more expensive than supermarkets and extra costs can add up quickly. If you’re proactive you will be able to save money by shopping wisely.
3. Reduce debt
Easier said than done, right? Debt is easy to get into but very difficult to get out of. But it’s not impossible! The first step is to say “NO” to new debt.
The more debt you take on the more interest you need to pay and the further away you’ll be from saving. According to a DebtSafe survey, in the first quarter of 2015, 51% of South Africans can’t make their debt repayments. DebtSafe manager Wikus Olivier explained that many South Africans spend most of their income on debt repayments, struggle to cover their expenses and, as a result, take on extra debt they can’t afford.
When household debt, which includes home loans, credit cards and overdrafts, stands at roughly 80% of household income according to SA government statistics, it’s no wonder we’re finding it difficult to start a savings culture.
The key to reducing your debt is to understand that there is no quick fix, it takes time, a plan and dedication. Becoming debt-free is achievable if you develop the self-discipline to stick to your monthly payments without accumulating additional debt and work towards paying off one debt at a time.
Did you know: If you use the money you save from cutting back and shopping wisely, to contribute to your debt repayments you can reduce your debt faster and save money by paying less interest.
4. Make it a habit
The best way to save is… to save! It doesn’t take a lot of money to get your savings pool going. Start small but save something, and soon enough it will become a habit.
If you develop the habit of saving, you’re halfway there, regardless of the amount you put away. People generally don’t save because it’s not part of their plan. Make saving a part of your monthly expenses and it will become a routine.
It might be a good idea to place your savings in a separate account, this will help to keep it out of sight and out of mind. Once saving becomes habitual behaviour, it will be easier to increase the amounts you save in the future.
If you struggle to make saving habitual on your own, consider consulting with a financial planner for advice. From March this year, The National Treasury has introduced the Tax Free Savings Account in an effort to encourage saving within the country. Why not take the opportunity to get your saving started?
5. OUTsurance makes saving easy
Saving money doesn’t necessarily need to involve sacrificing life’s little luxuries; you may already be doing things that could save you money every month, like where you park your car, what you do when a hailstorm starts or how you get to work.
In fact, OUTsurance has more than 40 ways to save you money on your car insurance every month, and they’re probably things that you didn’t even know about.
You might be a stay at home mom, use public transport or park in a secure office park at work. You may have taken an advanced driving course, or have a job that doesn’t require you to use your car during the day. All of these, and much more, could save you money on your car premium, that you could put into a savings account every month. Sound good?