Saving tips for you and your family

Saving a part of your monthly income is important because it gives you greater financial security. If you’ve a large amount of money saved you will be able to pay cash for emergencies instead of using your credit card. You’ll have enough for a comfortable retirement and have enough to ensure you and your family remain comfortable.

Saving money may seem difficult if you don’t earn a lot, however putting away at least 10% of your monthly income every month will provide you with financial freedom in the future.

There are many reasons why we should save including:

Retirement – Retirement is one of the main reasons you should save. You cannot work and earn an income forever, and with the average life expectancy in South Africa rising, you need a steady income and savings to meet your basic needs. One of the easiest ways to save for retirement is by speaking to a financial advisor to open a pension fund.

Emergencies – Anything can happen in the future.  Having savings can help you overcome those unexpected emergencies without you having to go into debt. If you’ve cash set aside for emergencies, you will have a fall back in case something unexpected happens.

Education – We all have different aspirations and goals for our children. Having savings put aside will help you put your children through school and university. It will also help you to purchase their school uniform and utensils.  

How you can save?

If you aren’t sure where to start here are a few suggestions you could consider:

• Speak to a trusted financial advisor and open a savings account or a unit trust with a registered financial institution. If you’re looking for a long-term plan, ask your financial advisor about pension funds or retirement annuities.
• Don’t increase your lifestyle cost when you receive a salary increase.
• Limit your credit card spending limit to stop the temptation of using it. And use your credit card for emergencies only.
• Arrange a debit order to move your money from your current account into a savings account. This way you save automatically.
• Establish an emergency fund for in case something happens, like your car breaks down or you lose your job.
• Be realistic about what you can afford. For example if you’re planning to buy a car put down a 20% deposit, don’t finance the car for more than 4 years, and don’t spend more than 10% of your income paying off a car.
• Save towards something. Create a goal for yourself, such as saving for the deposit on a house.
• If you’re unsure on how to start then speak to an accredited and trust worthy financial advisor to guide you in the right direction. A financial advisor will also introduce you to investments and assist you in entering the stock market.
• Once you’ve paid off your car, student loan or credit card, keep paying that amount into a savings account.
• Don’t fall into bad debt. Bad debt is borrowing money to buy items that decrease in value, such as a car or clothing. A home loan, on the other hand is considered good debt because of the value of real estate increases.
• Use your credit card wisely. Credit card debt is also considered bad debt because of the high interest rates.

Others ways you can save

• Sell unused items and put that extra money into your savings account.
• Think carefully before making debt. Follow the 50/30/20 rule, which suggests you use 50% of your salary on necessities and bills, 30% to save and pay off debt, and 20% for entertainment.
• Always use a shopping list when you go out shopping. When people go out shopping without a list they tend to make impulsive buys.
• Learn basic handyman skills. If you know how to make basic repairs you will save you costs on hiring a professional handyman to make basic repairs around the home.
• Learn how to cook instead of buying takeaways. Also, cook large meals at home and take leftovers to work for lunch the next day.
• Do price comparisons before shopping.
• Cancel all unused gym (and other clubs) memberships. Exercise at home instead of taking out a gym membership.
• Buy generic brands instead of name brand items.
• Buy certain everyday items in bulk.
• Carpool or use public transport when travelling to work. This will save you on petrol costs, and help you save the environment.

If you are still unsure on how to save, we compiled this list of savings tips that you can follow. 

Expand your portfolio by investing in RSA Government Retail Bonds

An RSA Retail Bond is an investment with the Government of South Africa that earns fixed interest for the term of the investment. It offers guaranteed returns, can be bought for as little as R1 000 and carries no commission, agency or service fees.

RSA Retail Savings Bonds encourages households to start saving alongside business and government, while allowing investors to take control of their own savings portfolios, instead of investing through a third party. 

For more information regarding RSA Government Retail Bonds you can contact them Monday to Fridays on 012 315 5888 or via email: queries@rsaretailbonds.gov.za

What can you do if you're in debt?

If you need debt management guidance and advice, please get in touch with the Ombudsman of the Consumer Protector’s office on 0800 007 081. The Office of the Consumer Protector provides a financial literacy education programme that targets consumers across the province.

The Financial Literacy Education Programme provides more information about:

• why there's a need to budget,
• how to budget,
• what you can do if you're over-indebted,
• who will be able to assist you, and
• emolument attachment and garnishee orders.

For more information about the programme kindly contact Phenias Ncube on 021483 9282 or via email at Phenias.ncube@westerncape.gov.za 

VIDEO: We asked citizens how do they save on their monthly income?