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Bayport Blog

Do you know how much you know about saving?

Published: July 20, 2020
Categories: Financial wellness
Tags: Financial education, Financial Literacy

Saving is one of the pillars of financial wellness. It enables you to set objectives and achieve them, whether it is to clear debt or build assets for retirement. But how does one actually save, especially when it feels like you don’t have any spare cash? Here are some answers and tips to get you going.

Let’s start with why saving is important.

Firstly, it gives you a buffer when unexpected expenses come your way, such as your car breaking down, or if you need to make an unplanned trip home because a family member is ill. When you have an emergency fund, you don’t need to go into debt to handle life’s surprises.

Secondly, saving makes it possible to buy things that you cannot afford as part of your normal cash flow. It might be a course you want to do, or a piece of furniture you need or a holiday with your family. Again, with savings in the bank, you don’t have to borrow to buy the things that will add value to your life.

The third big reason for saving is that it’s the start of building wealth. For instance, when you have saved enough for a deposit, you can buy a house. Paying for tuition fees can give you a qualification that opens better career opportunities. Or money growing in an investment account will help you retire without financial concerns.

What is the difference between saving and investing?

Saving is done for a specific purpose, such as paying school fees or being prepared for emergencies. You put your savings into an account that allows you access to your money at any time. Because of this, the interest is usually fairly low. Examples of savings vehicles are normal savings accounts, fixed deposit accounts or community-based funds like stokvels.

Investing is done to build wealth. You can invest by putting money into a business or into an investment account or the stock exchange. You have the chance to make more money but the risk of losing money is also greater.

Should I save or pay off my debt?

Your first priority should be to pay off your debt so that you don’t end up paying a lot of interest. As your debt becomes paid up, you can put the money that is available into a savings account.

How do I start saving?

With a little bit of basic financial planning, you can start saving immediately:

  • Draw up and stick to your personal budget.
  • Track your expenses by writing down every cent you spend. After doing this for only one month, you will start understanding where your money goes and how you could change your spending.
  • Pay yourself first. Set up a debit order that puts money in your savings account first on payday.
  • Don’t buy on impulse. Take the money you might have spent on a snack or a drink and put it in a savings jar.
  • Instead of buying lottery tickets, put money in your savings jar.
  • Speak to your credit providers to negotiate lower interest rates on your loans.
  • Give up expensive habits such as smoking, drinking or frequent takeaways.
  • Tell your family and friends about your savings plans so that they can support you instead of putting pressure on you to spend.
  • Grow your own fruit and vegetables if you have a garden.
  • Run all your errands in one trip to save on fuel or transport costs.
  • Plan your meals a few days in advance so that you only have to go shopping once, only buy the ingredients you need, and use everything you buy.
  • If you need to switch on the oven for one dish, see what else you can cook at the same time to save electricity.

Remember, every rand you don’t spend is a rand you can save. It might sound like a boring way to live, but it is certainly not boring to buy your own house or to go on a fantastic holiday without getting yourself into debt! Financial wellness is a goal worth pursuing and saving some of your money, instead of spending it all, is a sure way of achieving it.

Do you know how savings savvy you are? Take the Bayport quiz to help you uncover your spending and saving habits:

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