South Africans, facing difficult financial times with hikes in fuel prices, increased interest rates and a rise in food prices, are finding that saving money has become a luxury they simply can’t afford.
However, all is not lost, and there are ways to free up some money in order to save in an emergency fund, says Janine Horn, financial adviser from Momentum.
Below she gives you advice on how to stretch your money:
Don’t drown in debt
Credit cards, clothing accounts and small loans can all contribute to a growing pile of debt. The best thing for anyone is to avoid the trappings of debt and that starts with understanding financial goals.
Financial success can be achieved on two levels:
- The journey towards a financial goal, and
- The destination when the specific goal is reached
All households and individuals need to have financial goals for financial success.
People can have long-term and short-term financial goals.
Some examples of long-term goals are saving for retirement or becoming financially independent while short-term goals are saving for a down-payment on a car or a family vacation.
Save yourself by saving your money
Momentum/Unisa research has indicated that many South Africans simply don’t have access to emergency savings.
Consumers have had to stop putting aside for money for savings to cover expenditure and service their existing debts, however, Horn says saving is a key component of a sound financial plan.
It is important that people have an emergency fund or savings for a rainy day to avoid the pitfalls of life.
People need to take a look at their budget and assess where they can free up some money to keep away in an emergency fund.
“You need to start figuring out how much emergency money you should have based on your lifestyle and expenses,” says Horn.
Don’t forget about retirement
People need to start saving for retirement quite early in life and the earlier the better. If you don’t have retirement plan in place, it’s never too late to start a retirement plan.
If you don’t know whether you are putting away enough for retirement, speaking to a financial adviser can help with formulating and reaching realistic retirement goals.