Cultivating a savings habit takes time, but it's not impossible to do. Saving money isn't just good for your pocket; it's good for the country. A strong savings culture is one of the cornerstones of any healthy economy. When we all save more, it helps keep our economic progress on track to benefit all South Africans. Here are six tips to help make saving a bigger part of your life.
1. Prioritise Saving
The best way to ensure savings success is to look at saving as something you do regularly. "Pay yourself first. Don't save what's left after spending, spend what's left after saving. Start early and start small," says Tebogo Mothapo, CEO of Legacy Wealth Management.
2. Set Goals
Differentiate between short-term, intermediate and long-term savings goals. This will help determine where and how you invest your money. When saving for short-term goals, it's best to invest in an interest-bearing investment like a money market fund. When saving for medium-term goals, it's best to get in touch with an experienced fund manager to help get the best possible growth. When saving for the long-term, you want to include as many growth assets as possible. "Invest for the long term as you will benefit from compound interest and Rand cost averaging," says financial broker Irvin Tsimane. "Go aggressive!"
3. Keep Your Options Open
If you want to save some money over the short-term, keeping your savings in cash is the best option. But, if you want to save money over the medium- and long-term, it's important to understand other savings vehicles on offer. Speak to a financial adviser about what would work best for you.
4. Take Your Taxes Seriously
Understanding your taxes will help you determine how best to save. If you're taxed at a high rate, a tax-free savings account or a retirement annuity allows you to invest at a lower tax rate than you would pay on your personal income.
5. The B Word
Budget. For some, it's a dirty word, but it's important to create a detailed household budget and to manage your finances in line with it. Creating a simple document of your income and expenses will help you understand where your money goes every month and help you plan your savings.
6. Get A Guru
If you need a specialised financial plan for your goals, it's time to bring in a financial planner. A financial adviser will help you prioritise your objectives and start working towards achieving them within your budget.
If you're ready to take your #MySavingsPledge, talk to a Nedbank financial advisor.