South Africa has been labelled as a nation of poor savers. Despite constant reminders on the importance of saving money, we are brushed with the description of being non-compliant and according to the South African Institute of Chartered Accountants (Saica) only 10% of South Africans save enough for retirement.
Research conducted by Budget Insurance and 1 Family 1 Stockpile, a 350 000 member strong Facebook group set up to help South Africans save money, found that although 70% of survey respondents agree that saving money is important for rainy days, 51% say that not having enough disposable income plays a big role in the consistency of their saving habits. Unplanned expenses, unexpected emergencies and the pressures of Covid-19 were listed as the main reasons they are unable to achieve their savings goals.
Ncumisa Ndelu, founder of 1 Family 1 Stockpile says: “We’re a nation of want-to-be savers with limited disposable income – the intention is there, the money isn’t. While saving in the current climate may seem an impossible task, it’s reassuring to note that 50% of the survey respondents manage to save between R100 and R500 a month. A little seems to go a long way because 46% say that their savings would help them survive for three months in a worst case scenario.”
Budget Insurance and Ndelu offers the following advice for saving money:
- Create, maintain and revise your budget – 33% of the survey respondents said they don’t save money because they don’t stick to a budget. If you don’t have a monthly budget plan, now’s the time to start one.
- Bank and invest wisely – check your bank fees carefully and look at the interest you earn on your savings. Could you be spending less or earning more? Research what other banks offer and look at other ways to invest your money, like buying shares. Also look at what rewards programmes are on offer, and take advantage of them. If you have a credit card, adopt an ‘emergencies only’ attitude and use your debit or cheque card for your everyday expenses.
- The 10% saving goal and the 30 day rule – saving every month is hard but you should make it a priority. The rule of thumb is to try keep 10% of your salary aside for savings. Also avoid instant gratification by waiting 30 days to decide whether a luxury purchase is really worth it. Impulsive buying is one of the major factors that contribute towards debt.
- Be careful what you cut – when money is tight there are certain expenses you may be tempted to cut from your budget, like vehicle and home maintenance or your monthly insurance premium. Cutting these costs could give you some short-term relief but may end up costing you far more in the long run.
- Revise your spending – Look at your grocery bill, are there ways to improve your spending habits behind the trolley? Try creating a weekly meal plan, buying in bulk and stocking up on discounted items to save. What about your electricity and water bills? You can save up to 10% on your electricity bill by lowering your geyser’s thermostat’s temperature to between 50 degrees C and 60 degrees C. A leaking tap can waste up to 10,220 litres of water a year, so fixing any leaks could help reduce your usage and spend.
- Stick to your goals but be flexible – your budget and savings goals can be impacted by events out of your control and you’ll need to revise them accordingly. You may plan to save a certain amount a month but have to keep a portion back to pay for unexpected expenses. That’s okay, just ensure you make up for it in the following months. Critically look at the expenses you can reduce, like seeing one less movie a month or going out for fewer meals.
- Reap the rewards of goals reached to up your motivation – If the goal was to save enough money to go on a holiday, then go ahead and enjoy that well-deserved break. That being said, it’s a good idea to set a budget for your trip to avoid repaying post-holiday debt in the coming months.
- Be open, honest and creative – your debt obligations and expenses may impact your whole family so ensure you manage their expectations by giving them a clear and realistic picture of your financial situation. If you need to make some lifestyle changes for a couple of months, try come up with creative alternatives to costly activities, like renting a movie and cooking a meal together instead of going out.
- Stockpile! – you can save thousands every month by looking out for and taking advantage of discounts and specials. By buying more, at a lower price, you’ll be able to stretch your rand and shrink your monthly shopping bill.
Susan Steward from Budget Insurance has this to say; “Remember that even the smallest adjustments in a number of areas of your budget can add up to significant savings. The small changes and sacrifices you make now will be worth it in the long-run.”