When it comes to saving, consumers may not be inspired to save as much as they aspire to spend, especially over the festive season, a banking expert said.
“It is no secret that South African’s think it is difficult to save,” said Michael Daniels, head of deposits and payments for Standard Bank. “The South African Reserve Bank reported that personal savings in South Africa decreased to -R983m in the fourth quarter of 2013 from -R903m in the third quarter of 2013.
“We need to think a little differently about saving and spending,” he said. “There are some really great tools like budgets and spread sheets designed to help us manage our money; however, it is often our mind set that trips us up. We need to spend some time analysing our daily behaviour in order to get our finances on track.”
Here are some tips and alternative concepts that may help you to think a little differently about how to tackle the task of saving and building your wealth:
Don’t be a pay-day millionaire
Most of us tend to spend 80% of our salary in the first week of receiving it, which usually leaves us financially stretched by the end of the month. Try to turn this around and instead create a culture where you stretch your money till the end of the month so that you go into the new month with money from the previous month. Apply this thinking to everything you earn. If you get a promotion put the extra money aside for savings and building up your wealth, rather than increasing your spending.
Reward yourself for reaching a savings goal
Rewarding yourself for hard work or a tough month is a great tool to keep us motivated and inspired. Instead of spending the money on an item that you might like but do not need, rather consider creating an alternative solution like rewarding yourself for reaching a savings goal. For example, when you’ve saved R3 000, go out and purchase that R500 outfit that you had your eye on. Saving can be addictive, the more you save the more you will want to save.
Any amount counts
Nowadays, R40 won’t buy you a whole lot, but suppose you saved that amount per work day? Maybe that means making your own lunch instead of buying yourself lunch on a daily basis. You could be raking in a massive amount of savings that you can use in future. You would save R9 800 in one year if you saved R40 a day. After 10 years, the savings and earning would be worth about R184 000. The benefits of a packed lunch today could be worth the price of a small car in 10 years time.
Analyse your banks statements
If you are looking for some extra cash and saving on cost it is a good idea to look at your bank accounts and banking behaviour. You may be paying a debit order for a service you no longer use. If you haven’t used that gym membership in four months, you could consider cancelling this as money is being spent on a service that you do not use. You could use the money to pay off debt and being debt free will help you get your mojo back.
You could also save money by using the online services offered by your bank. Instead of going into a branch, it is worthwhile considering doing most of your payments via internet banking and debit orders.
Check your bank accounts and policies regularly
Evaluating your banking accounts is also a good exercise when looking at saving money. Many people open up bank accounts when they are 16 and stick with them forever. You could save some cash by speaking to your bank consultant to get the correct account for your needs.
Check your insurance and investment policies, they could be inefficient and not delivering what you need. Checking them regularly will enable you to see if you’re overpaying in any areas and make adjustments that could save you some cash.
“By implementing these tips you will change your behaviour and the course of your financial future. While making money is an important element of wealth, managing the way you engage with money can fast track you to wealth,” said Daniels.
5 tips for saving
1. Spend responsibly
Never spend more than you earn. Dipping into your savings or using credit to maintain an elaborate lifestyle will come back to haunt you.
2. Buy clothing on sale
Sign up to your favourite retail stores’ newsletters and be the first to know of sales. Head to the clearance rack or simply shop online to limit temptation.
3. Start saving now
The sooner you start saving, the more you can earn with compound interest. Try to save between 10-15% of your monthly income.
4. Hands off the pension
Never dip into your retirement fund. Save separately for holidays and other luxuries. Your future you will thank you.
5. Be tech savvy
Technology allows you to spot the latest deals and compare prices and use free Wi-Fi spots for large downloads.