When I started working, I was in my third year at University. I worked as a junior accountant in a family business. I earned a total of R3 500 per month! Although it was not a lot of money, for a student with little responsibilities, it felt like a lot!
Even though I did not have a grand goal for my money, I knew that I had to save. My mother had told me to! So, from my little riches, I started saving 10% (R350) every month. By the end of the year, I had put away R4 200, not counting the interest I had earned.
You are probably asking yourself why I am telling you about my first job and what I used to make? It’s because I often think about the lessons I learned from that experience and I like to tell the story at my speaking engagements or workshops.
Can you save money? Is it easy to do so? The answers to the two questions are: yes and yes!
Don’t get me wrong, I know our financial decisions are also informed by what’s happening in our lives. There are many reasons why a lot of people feel they cannot save. Perhaps you have a big family to take care of, or you are working and funding your own studies. That’s why it pays to make saving a part of your life, instead of viewing it as just another expense.
Lessons from my experience:
- Just start, no matter how small / pay yourself first
Commit to putting money aside, regardless of how small it may seem. Not only will you be saving, but you will be doing something that is much more important — you will be building the habit of saving. If you make saving a habit from when you earn a little, it will be that much easier to save once you start earning a lot more.
For you to start, you need to look at your overall budget and ask yourself — what can I cut back or how can I make extra money so I can start saving?
- Emergency fund
Having savings or an emergency fund provides a safety net. Without an emergency fund, you could find yourself having to use credit, which could be expensive in the long run.
Many experts will tell you that you need the equivalent of at least 6 months of your salary saved in an emergency fund if you want to give yourself a proper safety net. I always say, start with what you can while you work towards the ideal situation. Have a number in mind, for example, at least R10 000 in a flexible savings account for any emergencies. By having that amount, you will begin to feel a sense of security as you build towards a larger amount.
- Pay off debt
The quickest way to save money is to try and pay off your debt. Debt costs money in the form of the interest rate your credit provider charges you. The higher the interest rate charged, the higher the cost of that debt. Debt, like credit cards, overdrafts and store clothing accounts, can be expensive. If you pay them off, you could have more money to save every month.
- Automate your savings
The best way to save money is to automate your savings. Treat your savings like you do your expenses. What do I mean by this? Just like certain expenses go off your account via a debit order, so should your savings. Using your internet banking, you can easily ensure that money goes into your Savings Pocket as soon as you get paid.
This ensures that you actually do save and negates the possibility that you might forget, or spend the money on something you probably don’t need.
There are many savings options with African Bank to choose from. They offer SA’s best rates, making sure that your money works as hard as you do.
Regardless of your situation, having savings is an important part of our financial lives and building the habit of saving, is priceless.