54% of South African women save for emergencies
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A recent survey by the UK-based financial services company, Aegon shows that men are more prepared for unexpected expenses than women. According to the survey, 30% of men are confident that they can cope with a surprise expense compared to just 21% of women.
However, the reverse appears to be the case in South Africa.
A Budget Insurance survey revealed that 54% of women save for emergencies or unexpected costs compared to 46% of men.
The current COVID-19 crisis has highlighted the importance of emergency savings and savings in general. With businesses closed or operating at reduced capacity under lockdown, millions have been forced to draw on their savings or go into debt just to make ends meet.
Prem Govender, chairperson of the South African Savings Institute (SASI) notes that those who had an emergency fund at the beginning of the year have weathered the lockdown storm better than those without. “Our focus has to be on building financial resilience to help during such times and helping people learn how to stretch their rands,” she says.
Susan Steward of Budget Insurance says that while saving in the current environment may seem an impossible task, there has never been a better time to sanitise your budget so that you can start building up emergency funds. “Your budget may be stretched to the maximum but you can start building good money habits now that will form the foundation for a secure financial future,” she says.
Money habits you can adopt now:
Budget, budget, budget.
Use a notebook or even an Excel document to keep track of your expenses and income each month. Note down every single time you spend money – including small purchases such as coffee or chocolates.
Review your budget.
A budget is not a static document but needs to be reviewed regularly. Look at which costs can be cut to save money. As you pay off one debt, for example, a store card, divert that repayment to your next debt, such as your credit card. Pay off the debt with the highest interest rate first.
Why pay when you can get it for free?
Cut out unnecessary expenses. For example, join your local library so that you don’t have to buy as many books. Buy a filter jug and drink tap water instead of paying for bottled water. Carry a packed lunch from home rather than buying an expensive sandwich at work.
Curb the lifestyle creep.
This is sometimes easier said than done and will require discipline on your part. For example, you don’t need takeaways when there’s nothing wrong with a home cooked meal. Rather allocate the extra funds towards your savings.
Pay yourself first.
It is a common mistake to think you can pay all your expenses and then save what is left. Nine times out of ten, there will be little to nothing left because you have used the money available to you. Rather set up a debit order for your savings. R100 a month becomes R1 200 over a year and you can increase the amount gradually.
Tax-free savings accounts.
Take advantage of these savings vehicles which encourage you to save by reducing your tax. The current limit is R36 000 per tax year and R500 000 over your lifetime that can be invested tax-free. These accounts are available at banks and investment companies.
“It’s never too late to learn good money habits. While the current environment may not be conducive to saving, changing your financial behaviour can easily set the tone for successful saving,” Steward says.