GUIDES: Tips for saving on a low income
A large percentage of South Africans live from pay cheque to pay cheque, so money is tight and there’s nothing left by mid-month.
People often question how saving for the future is even remotely possible, when so many have to get by on their low salaries.
Statistics from Trading Economics indicate that the Household Saving Rate in the country dropped from 0.2% in the third quarter of 2018 to a low of -0.5% in the fourth quarter.
With July being Savings Month, everyone should make an effort to spend less and save more.
This is a tall order for the majority of South Africans, but with a shaky SA and global economy, we have to try. Every cent not spent, will eventually result in a saved sum of money. The key is to get started.
Tips for saving on a low income:
* Pay high interest debt first: High interest rates from personal loans often lead to ridiculous additional fees and charges. Pay your debt and try not to accumulate more.
* Set limits on your debit and credit cards: This will help prevent impulse purchases.
* Try to cut housing costs: Housing takes up a huge chunk of your money. For example putting lights and geyser off when not in use can lower your electricity bill.
* Consider switching banks: Find out which bank has the lowest fees and whether they have perks to take advantage of.
* Avoid buying takeaways or eating out: Prepare all your meals at home and pack lunch for work.
* Monitor your bank statements religiously.
* Have a “side hustle”: An extra job over weekends, such as waitressing, doing make-up or a delivery service can be helpful.
* Plan your shopping: Impulsive sprees should be a no-no. People are always shocked at the amount of money they’ve spent when it’s over. It’s better to work with a written budget every month to prevent money leaks from happening.
* Try the 50-20-30 rule: Set up a budget with three spending categories where 50% of your income should be spent on your rent, utilities, groceries and transportation costs, while 20% should go to your savings, investments, and debt.
The other 30% of your income can be used for other things you may want but not really need. You need to be realistic here, though, so try to add more to your savings. It’s more important than the instant gratification a want brings.
Always remember that diligence is key, Lombard advises. “There are many ways to save money, but you need to be persistent and commit to following through, in order to reach your long-term saving goals.
Lastly, don’t get too excited once you notice the results from the savings techniques you’ve employed.
That money needs to be put into an emergency fund or investment account as a nest egg for your future.
Herman Lombard is African Unity founder and executive director.