The three golden rules for saving
The three golden rules for saving
The many savings comments and advice given over this time could be quite overwhelming for somebody who realises the importance of saving, but doesn’t know how or where to start.
“Fortunately, saving does not have to be difficult. Like any good habit it may seem challenging to start, but once you get going, it becomes second nature. Saving comes down to the fact that you need to be disciplined and get into the habit of saving as soon as you can,” explains Aneesa Razack, Head of Strategy at FNB Savings and Investments. Saving requires continuous effort and everyday expenses or overspending can easily chip away at the money you hoped to use towards saving. FNB Savings and Investment’s Aneesa Razack, shares her ‘three golden savings rules??? that will help South Africans succeed in their savings journey.
Rule 1: Don’t snub the small amounts
According to FNB Research, a key difference between savers and non savers are that savers believe in the value of small saving small amounts. “Whilst you might think that to get into the habit of saving will require a dramatic lifestyle change, you will be amazed at how small changes can help free up extra money for you to save towards your goals,” says Razack. For example, deciding to not buy a cappuccino at work every day could free up R15 every working day. That doesn’t seem like much, until you realise that it adds up to R300 a month. “Small adjustments to your spending will free up the money that you need to save, despite increasing pressure on your disposable income,” explains Razack. In an economy where the cost of living is increasing, these small amounts can help you to meet your savings goals despite financial challenges.
Rule 2: Hands off!
“When it comes to saving, time is your ally. The more time you have the better because you benefit from compound interest or, in simple terms, earning interest on interest.” says Razack. Compound interest boosts the saving efforts of regular savers, even those who only put away small amounts, as it adds more value to savings over time. Aim to keep your savings going for as long as possible so that your money will start working for you. You can use online calculators to calculate the future benefits of what you???ll earn from this compound interest to keep you motivated.
Rule 3: Pay yourself first
Very often saving is something that people do with money that is left over after all expenses have been paid and it’s almost time for the next salary, but rarely do we have money left to save at this time. “One of the secrets to saving is to ‘Pay Yourself First’ by saving something immediately as soon as you get your salary,” says Razack. By placing a scheduled transfer between your transactional account and your savings or investment account, you in essence automate your regular savings and ensure that you pay yourself first. Automating savings will also help in disciplining yourself to save, enabling you to reach your savings goals. “If you stick to these three rules throughout your savings journey, they will prove to be worth their weight to you in gold,” concludes Razack
