We take a look at a few simple ways South Africans can save money without even trying, from setting monthly savings goals to restructuring existing debt.
Most people understand the importance of saving money, but everyday costs can get in the way. Just when you think you might have a little disposable income at the end of the month, along comes an unexpected bill to put you back to step one.
Research has found that South Africans are excellent borrowers but not very good savers. Given that the working population spends an average of 19 percent of their monthly pay packet on repaying debt, it’s perhaps not surprising that there’s not an awful lot left to save.
So what are we doing wrong? In this guide, we’re going to introduce a few simple ways South Africans can save money without even trying…
- Set up a monthly savings goal
Research has shown that it’s much easier to save if you set a manageable monthly target. For many people, it’s all about forming that money saving habit, even if it’s only a very small amount you put away. The key is to make sure it’s achievable. Setting up a direct debit from your current account into your savings account removes the need for any activity on your part so you can’t conveniently ‘forget’ to put the money away.
- Transfer cash immediately on payday
The habit of spending freely just after payday is one you need to break. Setting up a direct debit to move an affordable amount of cash to your savings account immediately after payday is far more effective than waiting until the end of the month and saving any money you have left. Even if you transfer just R1000 every month, that will create a R12000 nest egg at the end of the year.
- Reduce your debt costs
If you’re paying high rates of interest on credit cards or other forms of debt then saving is unlikely to be the most effective use of your money. Instead, you’d be wise to try and pay off your debts as quickly as you can. Restructuring your existing debt could make your monthly repayments more affordable and allow you to clear your debts more quickly. Simply taking 30 minutes out to review your debts could help you find a better deal.
- Make the most of fintech
Financial technology has opened up a whole world of options for the financially underserved. You can use tech for everything from creating monthly budgets, keeping tabs on your spending and managing your current and savings accounts. There are even fintech platforms that feature algorithms to help you calculate how much you can save every month.
These simple money saving methods are very much the tip of the iceberg. There are also many other approaches you can take. The online lender Wonga recently compiled a list of 40 money saving tips to help you spend less and save more. That could help to provide some much-needed inspiration.
How do you save more and spend less? Please share your tips with our readers in the comments below.
To read more on topics like this, check out the money category