A money saving plan that can withstand load shedding

A money saving plan that can cushion the impact of life’s unexpected events, could mean the difference between financial freedom and financial failure.  We’re talking about protection against anything from a broken-down car, to a burst pipe in your house, and even a shortage in electricity, much like what we’ve experienced in South Africa this year. So, how do you build a budget with some fat in it, so that you’re prepared for the unexpected?

Earlier this year, Eskom started load shedding and we all began to feel the pinch. Not only were we dealing with hours spent without power, but consumer budgets were being disrupted as dinners at home turned into take-aways and power surges ruined electrical devices. To top it all off, cellphone companies have already warned that data prices will be impacted, and shift workers are also being affected with much fewer shifts to go around.

How do you prepare for these unexpected financial expenses? Here are a few essential strategies that will give you the peace of mind when a crisis catches everyone unaware:

A proper money saving plan is vital when it comes to unexpected expenses

If you’ve already got a money saving plan in place, you’re one step ahead. Implementing a proper savings plan is the key to surviving an emergency expense or unexpected event.  Below are five saving tips and tricks to saving money on a regular basis.

1.       Start with a budget

Having a budget puts you in control of your money, rather than having your money control you. The lack of a budget leads to unnecessary purchases that could quickly add up to hundreds or thousands of Rands at the end of the month.

The key to a proper budget is to write it down on paper and review and update it on a regular basis, i.e. every week, bi-monthly or monthly.  Simply make a list of your current expenses, your income, and your financial goals. 

Create a plan to make sure your expenses are all paid properly, then you set yourself a limit on variable expenses such as groceries and entertainment. Be sure to contribute to your savings plan on a regular basis.

2.       Put your savings on autopilot

Setting up debit orders will ensure you never forget to contribute to your savings. When you set up automatic transfers of an amount that fits your budget, you essentially put your savings on autopilot.

3.       Regularly increase your savings

As you progress in your career, chances are your income will increase as well.  Plan to increase your automatic savings transfers as your income grows.  Review your savings plans on a regular basis and increase your contributions as your income grows.

4.       Separate your emergency savings from your main bank accounts

It’s easy to justify dipping into that hard-earned savings account so you can purchase that new TV, the latest cellphone release, or treat yourself at the mall.  However, if you keep your savings separate from your main bank accounts, you make it more difficult to dip into this money when you are tempted into impulse buys.

5.       Always pay yourself first

Perhaps the most important and vital tip to saving money, is paying yourself first.  What does this mean? It means that when you get your paycheck, be sure to pay yourself in the form of contributing to savings, BEFORE you pay any other expenses.  We’re not talking about a lot of money; it can be as little as R100.  The idea is to contribute something.  Then, once you’ve budgeted your money, you can plan to contribute more as you are able to.

If you follow these five tips, you will be well-prepared should another emergency financial situation occur.  When followed persistently, you not only grow your wealth, but you can have the peace of mind that you are strong enough financially to withstand almost anything.

Save electricity, save money and cope better with load shedding

The best way to deal with load shedding is to find sustainable ways to save electricity. The first prize for many South African homes would be to go “off grid”, meaning your home or business can operate independently of Eskom’s electricity grid. A recent article published on Business Insider South Africa, said it would cost approximately R200 000 to rig an average four-person home with 25kWh of solar power per day. This is a move that ultimately requires long-term financial planning. African Bank has a few investment products boasting SA’s best investment rates, which can help if you’d like to put money away for something like that.

However, if you’re unable to take your entire home off grid, a shift to alternative energy sources, even on a small scale, would have a positive impact on Eskom’s grid and your finances. Light up your garden with solar lights, use gas appliances where possible and install energy-efficient items such as LED lights, geyser blankets and efficiency-rated dishwashers, washing machines, tumble-dryers, etc. A pre-paid electricity meter also helps you better monitor your energy consumption.

Protecting your electronics from power surges is a preventative measure that could end up saving you money. Whenever the power is cut, there is risk of a spike in energy when the electricity comes back on. This spike can damage your appliances. The most obvious thing to do is to unplug your appliances when there is a power outage – but this isn’t always possible, especially if you’re not at home during the load shedding. The best option is to purchase a surge protector, which acts as a buffer between the socket and the appliance. You can also invest in a battery back-up system such as a UPS (Uninterruptable Power Supply) or a solar powered option.

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