SA battling with savings – practical tips to get your budget back on track

Posted on 17 May 2023

According to The International Monetary Fund, recession-type conditions are looming.  What this means is that tough times are going to get tougher.  

According to Stats SA, South Africans are saving less, with the Household Saving Rate (the total amount of net saving as a percentage of net household disposable income) decreasing from an already low 0.30% in the first quarter of 2022 to 0.20% in the second quarter.

In addition, the Financial Sector Conduct Authority (FSCA’s) most recent report on Financial literacy in South Africa paints a grim picture:

  • Almost half the adult population (46%) reported that they had experienced an income shortfall.
  • A fifth (19%) stated they are unhappy with their financial situation.
  • South Africans are increasingly struggling to pay their bills, with 70% of the low LSM group, and 28% of the high LSM group finding it difficult to make ends meet.
  • Many South Africans, especially the vulnerable and the poor, embark on unsustainable debt coping strategies.
  • A substantial share of the country’s adult population remained insufficiently prepared to make functional financial decisions, 

“Although these insights are cause for concern, it doesn’t mean the situation is hopeless. On the contrary, it provides a valuable opportunity for learning and growth,” says Susan Steward, spokesperson for Budget Insurance, “You can change your financial situation for the better with the very next decision you make. It comes down to proactive effort, discipline and smart money management.”

Budget Insurance provides the following tips to get your savings on track:

    • Start NOW: Putting your financial overhaul off until tomorrow, then next week and next month could see you wasting hundreds, perhaps even thousands of rands.
    • Knowledge is power: The web is filled with free explainers on financial concepts and terminology, life hacks and tips to get the best bang for your buck, advice on negotiating better interest rates and pro tips from experts on how to make better money decisions. Some of your friends may also be smart when it comes to money decisions and valuable to chat with. Use these resources to make your money grow.
    • Go through your filing and clear the clutter: You should be filing all your payslips, invoices, receipts and tax certificates so that you have them handy when you are doing your tax returns each year – it could help you to get some money back. SARS requires you to keep these documents on file for a period of five years after the return is filed. That said, get rid of older documents that you don’t necessarily need any longer. 
    • Create, maintain and revise your budget: In a recent survey conducted by Budget Insurance and 1 Family 1 Stockpile, a 350 000 member strong Facebook group, 33% of respondents said they don’t save money because they don’t stick to a budget.  If you don’t have a monthly budget plan with accurate income and expense figures, now’s the time to start one. 
    • Cut, but be careful: It’s a good idea to cut unnecessary or non-essential expenses first, but be mindful. When money is tight there are certain expenses you may be tempted to cut, like vehicle and home maintenance or your monthly insurance premium. This could bring some short-term relief, but may end up costing you far more in the long run. 
    • Revise your spending: Are there ways to improve your spending habits behind the trolley, in banking fees, behind the wheel, at the dinner table, on your utility bill or subscriptions? Buying a less expensive brand, cooking instead of buying, shopping for specials, carpooling, saving a couple of rands per tank or racking up those savings with a loyalty card may seem insignificant, but in just a couple of months it could save you thousands.
    • 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.  
    • Review your insurance: Not all insurers automatically revise your insurance premium each year, aside from an annual escalation. However, if you insured your car for market value and the value has depreciated, your premium should go down too. Check your inventory to make sure that all unnecessary items are removed. Also don’t be absolutely set on sticking with one insurer – shop around and compare to save even more.
    • Avoid the love for credit and the debt trap: Reduce the number of credit cards you carry and rather pay with your debit card or cash if possible. If you can, pay extra into one card until the debt is paid off, then start paying that extra amount into another card until it is also paid off. Don’t use your credit card unless you are able to pay the minimum amount due each month. Never buy food or other necessities on credit or use one credit card to pay your debt on another one. Avoid taking higher credit limits, as they’ll tempt you to spend more. Avoid instant gratification pressure – rather save up cash to buy what you want.
    • Don’t spend what you save: Going through all the effort of saving only to fill up your budget with more non-essential expenses defeats the purpose. Rather save up or settle other debt.
    • Get that emergency fund started or boost it: With the constant threat of events like lockdowns and job losses, it’s recommended that you have three to six months’ worth of expenses saved up in your emergency fund.  Start by saving a small amount each month. Commit – don’t withdraw anything from this fund unless it’s a crisis.
    • 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.
    • 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, in shares for example. Also look at what rewards programmes are on offer and take advantage of them. And if you have a credit card, adopt an ‘emergencies only’ attitude and use your debit or cheque card for your everyday expenses. 
  • Explore other income streams: Turning your hobby into a side hustle, or helping a friend to market their business at commission, for example, could supplement your income.
  • Stick to your goals, but be flexible: Your budget and savings goals can be impacted by events out of your control, like unexpected expenses. Revise them accordingly. 
  • Reward yourself, motivate yourself: 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.

 






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