South Africans are riddled with debt and one of the reasons they struggle to maintain a savings culture is because of impulsive buying behaviour, according to debt experts.
Other factors contributing to a poor savings habit are economic issues, bad financial decisions and a lack of discipline when it comes to saving.
With July marking National Savings Month, there is no better time for South Africans to get proactive with their savings habits.
National Savings Month is an initiative that was started in 2001 by non-profit organisation South African Savings Institute (SASI). The campaign aims to raise awareness of fiscal planning and saving, as well as getting all citizens informed and active when it comes to investments and savings.
An alarming finding in the 2016 Old Mutual Savings and Investment Monitor was that 49% of the respondents (working metropolitan population) were saving less compared to 2015. The statistics indicated that the savings level of South Africans was less (15%) than the debt level (16%).
Fortunately, it is never too late to start being a good financial steward.
Here are some handy tips for consumers to improve savings habits:
You need a savings plan and savings goals. Ask yourself: what are my future plans and aspirations? Do the research and find the best investment provider and options regarding your short-, medium- and long-term goals. These savings goals can include your children’s education, your retirement (a long-term goal for example) or buying a house.
Savings first, deductions later – put your savings away before your debit orders go off and before you get the chance to spend it. You don’t have to start with a big amount. Rather start small (what you can afford to save) and adjust your savings amount accordingly.
Don’t fall prey to consumerism, the media or advertising. What you think you want is not always what you really need. Stick to your shopping lists while doing groceries and discover your own unique style and trends – don’t get fooled and lose your personal touch when it comes to tech gadgets, clothing and accessories. These items can be expensive, but only if you give in to the overall trend.
Get creative and try things like a spending freeze. Cut out unnecessary spending and splurges. Make use of what you currently have available when it comes to food, clothing and household items. Get creative with new recipes and clothing add-ons and ‘rejuvenate’ old furniture to usable, modern pieces.
Is debt an old friend? You cannot start saving or encourage others to save when you set an example of over-indebtedness. Make use of the snowball effect, i.e. pay off your smallest debt first and then the bigger ones. You’ll learn some discipline in the process and can also continue with these habits when you get the chance to start saving properly.
Teach your children by example, and if they are already adults, then encourage them to foster a savings culture for their children. Life-long habits can make the difference between financial difficulties or financial success.