How to save money monthly
While saving money is important, many people are unsure of how to save money monthly. As a result, they’re not saving at all. When money is saved in accounts with low interest rates, you aren’t growing your money as much as you could.
Did you know that only around 15% of working South Africans save money? When it comes to the entire population, that number is a staggeringly low 3%. Meanwhile, the country’s savings score is at its lowest level since 1990.
As we’ve hinted above, some thought needs to go into the different ways to save your money and how to grow it. It’s important to maximise your hard-earned savings - even a small difference in the amount of interest you earn can add up to a huge difference over time.
Four years ago, the National Treasury introduced a tax-free savings account (TFSA) to improve South Africa’s poor savings rate. This means that savings proceeds such as interest income, capital gains and dividends are tax free. One is able to open two tax-exempt savings accounts a year.
So how do you save money monthly? There are different ways to save money. Your first step is to do some research when looking for the best savings plan. Identify the best savings account and/or other investment vehicles for you, such as a fixed deposit account with good interest rates. Make sure you're earning a market-leading interest rate and that you are investing in a tax-efficient structure.
African Bank's Tax-Free savings account offers both. Invest from as little as R100 and have the option of withdrawing some or all of your money in the anniversary month (a year after you have made your deposit). You can deposit up to R33 000 per year and up to R500 000 in your lifetime. Your original interest rate never drops, but you can benefit if the interest rate increases. Providing access to funds only once a year speaks to encouraging longer term saving. In addition, you can build your savings by making as many deposits as you like, up to a maximum of R33 000 per year.
Once you have decided on a preferred savings plan, it is worth shopping around before you invest your money. It is a good idea to choose a bank that you trust and that has a great reputation with regard to interest rates in general. Ultimately, saving for your future goals is a straight-forward process as long as you do your research and keep your investment consistent.