Saving helps to lessen the burden
Many of us have this idea that saving is not possible when you are over-committed financially. There seems to be a notion that saving is only for those who have money. However, the Credit Ombud and MicroFinance SA (MFSA) is here to change that narrative.
Saving can start from as little as the amount which you can afford. What it requires, is for you to have a plan and most importantly, discipline. A lot of us do not save simply because we do not know WHY we are saving. The National Credit Act (NCA) states that the ‘Purpose of the National Credit Act, 2005 is to promote and advance the social and economic welfare of South Africans;’. Advancement in life, requires planning and after planning comes implementation. And let us first establish that not all our life plans are the same as we are individuals with different needs, wants, pockets and situations, so it would not make sense for you to compare yourself with others when you start planning. Here is a step-by-step guide to save successfully:
1. First establish WHY you want to save. Is my saving for short-term or long-term?
Short-term saving would be saving for immediate expenses, such as going on vacation, paying off your debts, wedding, etc.
Long-term saving is saving for life-changing expenses, such as saving to start a business, saving toward your retirement, paying off your mortgage, etc.
This is the step where you list your priorities to distinguish what is urgent and gives you direction.
2. WHEN do I start saving? Immediately!
With proper planning and budgeting, you will notice that you can afford to save.
3. WHO should start saving?
Everyone. We challenge parents to teach their children to get into the habit of saving. As soon as you start giving your children any spending money/allowance, then teach them how to save for the things which they may want later.
4. WHY should you start saving?
Seasons change and no one can ever predict what will happen in the future. When you have savings, you relieve some of the stresses that life may throw at you.
5. WHAT are you saving for?
It could be anything. Save to pay off your debt. Save for leisure. Save for your child’s education or even your own education. You may be a hardworking individual and may want to just spoil yourself to go on vacation. Save for that vacation too. Depending on your list of priorities, you can save for anything which will help you advance in life.
6. HOW do you start saving?
Financial planning. Many sources recommend saving 20% of your income every month.
However, if saving 20% every month seems impossible now, start saving with what you can afford. A little goes a long way. This is the beginning of you being honest with yourself because you should establish what your current financial situation is compared to where you want to be. You must draw up a budget, which requires your bank statement. You bank statement will help you to relinquish what you may have been wasting your money on. This could be things such as frequently buying takeaways, unnecessary spending at the mall, or going out too often, etc. Variable expenses which you can cut down on can really help in making a change in your financial situation. Sacrifices may have to be done to achieve the main goal.
The point of saving is not to overwhelm you and to add to your financial obligations, but rather it is a way to assist you lessen the burden. When we encourage and urge consumers to save, it is merely us providing a tool that we know works. There are many ways to save, such as:
1. Stokvel - A ‘stokvel’ is a saving method, where participants (between 4 and 12 people) will each contribute money towards one single fund on a regular basis, which can be daily, weekly, or monthly.
2. Bank Savings/ Benefits for clients – Nearly all South African Banks reward you for banking better. They assist you in banking, saving, and spending better every day, with benefits and rewards in place.
3. Loyalty programs/ cards – Almost every retail store in South Africa offers a loyalty program/ card with saving benefits and specials.
Find out which method would best work for you; it may not even be just one, but you can find multiple saving methods that will help in achieving your goals. Don’t get discouraged along the way, this journey is long however it is well worth it and beneficial. Plan and stick to your plan no matter what happens, if you find it difficult to do it on your own, perhaps you could seek the assistance of a financial planner.
MFSA is the trusted voice of responsible microfinanciers in South Africa. MFSA’s vision is to ensure a sustainable microfinance industry. And the Credit Ombud Enforces Fairness in Credit and Credit Bureaux matters. Both organisations seek to educate consumers and credit providers on how to build a healthy credit industry to better the relationship between credit provider and consumer.