Top 8 reasons to save
1. Stress control: Saving can reduce stress levels. Knowing that you have money put away means that have made provision for future expenses and you will be able to cope.
2. Retirement: Most of us will reach old age and therefore need money to live on. Start young. While you may feel you are not ready for some of the retirement products on the market, you will need to save in any case so that you have a nest egg for your senior years.
3.Buy a home.Saving for a deposit on a home is possible the best thing you can do with your money. A large deposit will give you more choice in the property market regarding the cost of the property as well as the terms of repayment that you could negotiate.
4. Education: Save either for your own further education or the early education of your children. A good education is the basis of a secure future for anybody. Education cost escalate and you should have money set aside, particularly if you have private education in mind for your children.
5. Emergency fund. Life is unpredicatable. Whether this means retrenchment, loss of a loved one, divorce or a burst geyser, you should have a fair stash of accessible money to help you through the unforseen event. To play it safe ensure you have three to six months cover of your expenses.
6.Rest and relaxation: It’s important to take a break from the rat race and to do this you need to save. Put money aside with a goal in mind and get busy planning your holiday. This should make saving a pleasure.
7. Independence. If you have established a regular saving habit and have accummulated enough money, it allows you to be indepedent. This should free you from a bad relationship of a severely unpleasant working environment. With savings at hand, you don’t have to stay in either.
8. A car: Saving for a car is sometimes controversial. There will also be the debate of buying a car on hire purchase or paying cash. There are pros and cons to both. With hire purchase you are paying high interest rates but may get a better quality vehicle. If you pay cash, the amount you agree is the amount you pay and you own the car as soon as you drive it away.
Did you know that “since 1980, savings to gross domestic product, which was nearing 35% has seen a decline and is now below 15%?” Standard Bank
Easy ways to save money
Pay yourself first! This is key to any workable savings goal.Save, save, save is the mantra of our ministers and economic advisors. The sooner you start saving, the sooner it will become a habit and in a few months you will begin to see your money accumulate and feel less afraid of that inevitable ‘rainy day’.
When you experience too much month at the end of the money like most of us do, how can you even think about saving?
Saving is the basic blue print of a path to financial security and peace of mind. And there is no magic formula. If you put money away (and not under your mattress) it grows. It’s that simple.
So why do people find it difficult to save?
People live for the moment especially in the period of their lives spanning 20 to 35 when the accumulation of experiences and material goods are basic features of a lifestyle.
From the ill-afforded ‘millionaire lifestyle’ apartment to the equally financially foolish vehicle finance for the latest and greatest a year’s worth of interest is crippling even to the highest income earners.
Personally there are two things I resent paying – interest and parking.
I just can not see the sense in paying more for something than I really have to. With the exception of a house everything can be realistically acquired through cash or interest free terms. This is not rocket science.
There is hardly a retailer out there that doesn’t offer terms. True the premium that you pay for the advantage of 6-months of interest free may come with built in costs to cover losses on the part of the retailer. For clothes, the alternative is to look around and pay cash at another store that sells cheaper imports, or factory shops. For motor vehicles buy privately or spend time looking for what is available within your budget at second-hand dealers.
Stop and think
If you live your life on an eat as you live basis – in other words using up all the money you earn for your immediate wants and needs, you will never be able to save.
The ability to save begins with having money over at the end of the month that you do not need to spend on anything.
Before you get to that stage, you need to take a hard and honest look at what you are spending money on at the moment and decide where it is wasteful, extravagant or just simply unnecessary. Unnecessary spending is what stops you from saving. Saving is the simplest way to make your money grow.
You need to examine your spending patterns by dividing the items into different categories. You will most likely have expenses like, rent/bond, petrol/ travel food, clothing, insurances, medical.
Cut down where you can
These are typically costs you cannot avoid. However, you may be able to reduce some of them. There’s not much you can do about your rent but you can look at more economical ways to afford food, clothing, medical costs and insurance.
Are you buying global brands or house brands? Brands can be R2,00 or R3,00 more expensive than a generic alternative. These are usually made by the same manufacturer as the branded product without the fancy packaging.
Some items are just expensive such as dairy products and the only way to reduce cost is to cut them out of your shopping or buy fewer items. For example you may buy three yoghurts instead of six or one pack of meat instead of two. Supplement with cheap vegetables like potatoes and butternut or cabbage and beans.
Clothing is particularly expensive when you buy international brands and there are really a lot of alternatives when it comes to buying clothing. You don’t have to be the smartest person at work if you’re not earning the smartest money and if you want to dress up you can with a little imagination.
This is where a budget comes in handy. You divide your budget into things you need and things you want. You must decide what is a realistic amount to spend on the various items that you need within the limitations of your income.
Consider your income carefully. For many people it may be as simple as your salary after deductions, which makes your starting point very easy.
As soon as you have a budget you are on your way to your first step towards better money management.
By Iza Grek