But how can we manage to save when there always seems to be so much month left at the end of the money?
The answer lies in taking a closer look at where your salary is going each month, and what changes you can make to your money mindset.
Here’s something to make you think – and of course help you to start saving:
The extent to which a person is able to save depends largely on their attitude towards money and not how much they earn.
Ester Ochse, Product Specialist at FNB Advisory, says “Some people don’t earn much but are able to build a solid savings base, and the reason for this is simple – they understand the impact savings can have on their finances. On the other hand there are people who earn more but are not able to save and this habit can be attributed to a number of reasons.”
Here are some habits that impede people from building savings:
Not having realistic financial goals
Having goals is crucial for your financial well-being, but you must be realistic about what you want to achieve. For example, if you earn R5 000 a month, it may be unrealistic to aim to save 100% of your income every month if you depend solely on it, but it’s certainly possible to commit to saving 10% or more, especially if you are financially disciplined.
If you have unrealistic savings goals it will be hard to maintain momentum and very soon you will be overwhelmed and ultimately give up. Set realistic goals that are closely aligned to your personal financial circumstances.
Delaying savings
Never delay saving because you are waiting for the day when you will have enough money to save: that day may never come. The solution to this is to start small and build up your savings slowly over time: once you have developed a savings habit you can build better momentum from there.
The biggest excuse that people make is that they don’t have enough money to save any; you can start saving from as little as R50 or R100 a month.
Spending more than you earn
Simply put, this means living beyond your means. In other words you are spending way more than you earn and are most likely using debt to fund additional expenses that may be unnecessary. The rule here is simple; spend carefully and on items that you can afford.
Spending more than you earn traps you in a cycle of debt, and even if you are managing to save you will never meet your goals because some of your money will be directed towards servicing debt.
Ignoring wastage
Conduct an assessment of your expenses to see where your money is being spent and if you are getting any future benefits from what you are spending on. For example, you may have to re-assess your cell phone contract to see if you are getting your money’s worth.
Having goals is crucial for your financial well-being, but you must be realistic about what you want to achieve. For example, if you earn R5 000 a month, it may be unrealistic to aim to save 100% of your income every month if you depend solely on it, but it’s certainly possible to commit to saving 10% or more, especially if you are financially disciplined.
If you have unrealistic savings goals it will be hard to maintain momentum and very soon you will be overwhelmed and ultimately give up. Set realistic goals that are closely aligned to your personal financial circumstances.
Delaying savings
Never delay saving because you are waiting for the day when you will have enough money to save: that day may never come. The solution to this is to start small and build up your savings slowly over time: once you have developed a savings habit you can build better momentum from there.
The biggest excuse that people make is that they don’t have enough money to save any; you can start saving from as little as R50 or R100 a month.
Spending more than you earn
Simply put, this means living beyond your means. In other words you are spending way more than you earn and are most likely using debt to fund additional expenses that may be unnecessary. The rule here is simple; spend carefully and on items that you can afford.
Spending more than you earn traps you in a cycle of debt, and even if you are managing to save you will never meet your goals because some of your money will be directed towards servicing debt.
Ignoring wastage
Conduct an assessment of your expenses to see where your money is being spent and if you are getting any future benefits from what you are spending on. For example, you may have to re-assess your cell phone contract to see if you are getting your money’s worth.
By paying close attention to what you spend you will notice that over the long term you have prevented wasteful spending.
Not having the right savings tool
Spend some time researching different types of savings vehicles that are suited to you and can help you meet your goals over a set period of time. The type of account you choose as a platform for saving is a big financial decision and should be given due consideration. The first step is to understand your risk appetite and match this with your goals before deciding where you want to save.
“The reason most people are unable to save is because they spend first and leave nothing towards savings. This only means they have no safety net to tap into in case of an emergency. With the South African economy showing no signs of immediately revival, consumers can no longer afford to only rely on debt,” concludes Ochse.
Not having the right savings tool
Spend some time researching different types of savings vehicles that are suited to you and can help you meet your goals over a set period of time. The type of account you choose as a platform for saving is a big financial decision and should be given due consideration. The first step is to understand your risk appetite and match this with your goals before deciding where you want to save.
“The reason most people are unable to save is because they spend first and leave nothing towards savings. This only means they have no safety net to tap into in case of an emergency. With the South African economy showing no signs of immediately revival, consumers can no longer afford to only rely on debt,” concludes Ochse.
