Financial experts recommend that we keep the equivalent of three months’ salary in a savings account as a buffer against uncertainty. What your Gran would call “saving for a rainy day”. Unfortunately, saving money is not always easy, particularly when prices and interest rates seem to increase every day.
The good news is that saving money is not difficult – all it takes is discipline and routine. Make saving money a habit and you won’t even notice you’re doing it. Here are a few money saving ideas to get you started.
How will you save your money?
Physically, that is. Many people find the best way to save their cash is never to see it. “Pay yourself first” is a mantra that you’ll hear a lot of money experts use over and over again. Do a budget (find out how here). Work out how much you can put aside – even if it’s just R100 a month, that’s R1 200 a year. Then, put it aside by having it directly debited out of your bank account each month, into a separate savings accounts. Shop around with the banks to see who can give you the best interest rates.
So that takes care of the Rands. Now let’s look at the cents. We all have a lot of loose change rolling around in our lives. That loose change equals the easiest money saving idea ever. Invest in one of those large, tin money boxes – the kind you can only get open with a can opener – and put all your loose change into it at the end of the day. You’ll be amazed at how those 10c, 20c and 50c pieces add up over the course of a year. Get the kids to help you count it!
Where to find the savings
If you’re serious about saving money, there are several places to turn for help. You don’t need to be re-using tea bags to save a few Rand. The first place to look when you’re trying to save money is at your spending patterns. Yes, this is where we talk about the price of a cup of coffee.
Whenever someone starts offering savings tips, one of the first things they say is to cut out the coffees from the cafe. At anywhere from R24 to R40 for a latte these days, you can easily save up to R200 a week if you’re a daily caffeine drinker.
But the key to building savings is being realistic. Chances are you will not cut out every one of those coffees. So perhaps begin with dropping one a week – saving R24 to R40, and ensuring you put that money aside – and see how the money begins to add up.
Some simple savings ideas
Pay off your credit cards. While it might seem odd to start a list of savings ideas with some spending, it’s important to begin with a clean slate. If you have money sitting on your credit cards, attracting interest charges, then it doesn’t matter if you have R1 000 in your savings account, attracting 2% interest. You’re behind. Focus on paying down your debt, putting regular payments on your card. It’s a great routine to get into. Once the debt is gone, simply transfer those regular payment amounts into a savings account and, voila, you’re saving! The interest rate in South Africa is determined by the South African Reserve Bank and was at 5.5% in June 2014.
Drive less. With the price of fuel the highest it has ever been, and going up at every opportunity, every drop you save is money in the bank. If you’re a public transport user, find out whether monthly or weekly passes are a much cheaper option. Maybe start a lift club to work.
Turn off the lights. With load-shedding becoming a well-used term in South Africa, we are all aware of the lack of capacity and its ensuing high cost. It’s not just the environment that benefits when you save energy by turning off lights when you’re not using them – your wallet will too. Don’t forget to switch computers and televisions off, rather than leaving them on stand-by. A plasma screen on stand-by draws as much power as your fridge! And speaking of fridges, if you’re running a second, old one in the garage, switch if off when you don’t need it. You’ll notice the difference in your power bills.
Check your bank statements. Nobody said this saving money thing would be exciting, but the few boring minutes you spend going over your bank statements can find you some cash. Check your fees – are you using foreign ATMs on a regular basis? That’s some R3.00 every single time. Every time you pay with your credit or debit card you are also charged a fee. Did you pay your credit card late last month? You are paying a late fee! We spend a lot of money simply through disorganisation. Getting on top of our paperwork can really add up. Also check which banks will give you the best rates – some don’t charge you for every transaction and only charge you a monthly fee.
Do your tax on time. If you submit in time you will not be charged interest on the outstanding money.
Save money each month. Earmark some money for your savings account. A big lump sum can really help if you are saving for a house deposit.