START SAVING FOR A BETTER FUTURE

AWARENESS of the need to save does not necessarily influence a positive savings behaviour, nor does the fear of not having enough savings for the proverbial "rainy day", the Old Mutual Savings Monitor research has found.

AWARENESS of the need to save does not necessarily influence a positive savings behaviour, nor does the fear of not having enough savings for the proverbial "rainy day", the Old Mutual Savings Monitor research has found.

Old Mutual director of corporate affairs Crispin Sonn says: "Poor financial habits are at the root of poor money management. We need to focus on behaviour change to help break old habits and start new ones that will enable us to achieve our financial aspirations. Having a financial plan at an early age is the key to success."

The nationwide research was conducted in 1000 metropolitan households to look at trends among consumers and their attitudes towards saving.

According to the findings, one in two South African households are saving less than a year ago. This can be ascribed to a culture of non-saving, low financial literacy levels, over-indebtedness and tough economic conditions.

People in their 20s and 30s do not believe that savings are a priority and consider themselves spenders, not savers. The majority of respondents felt that in today's society, there is no alternative but to get into debt because they place a lot of value on material things.

To the extent that people are saving, they are saving for emergencies, buying a car and putting together a deposit to buy a home.

"Many people do not consider the impact of their 'living for today' lifestyle in terms of long-term needs. There are two issues - many of us are living beyond our means, and spending our money on luxury items that are not necessities," Sonn says.

Saving for the long term may seem less important in tough times. People have taken the view that they still have plenty of time to save and therefore it is not an immediate priority.

Old Mutual believes the time to begin is now. Although retirement may still be 30 years away, it is better to start saving a small amount regularly now, and benefit from compound interest (receiving interest on interest earned and increasing savings exponentially).

The alternative is to put away large amounts at a later stage when you may not necessarily be able to afford it.

It often helps if your saving is automatically deducted from your monthly income, before you pay other expenses.

By putting away your "savings" at the beginning of the month, the money is unavailable for spending. Eventually you will forget about it and not even miss it.

If you have to think about putting money aside each month, you may find reasons for not doing it and your savings plan may grind to a halt.

"At Old Mutual we believe that sound advice is essential to financial wellbeing. We encourage South Africans to seek the advice of financial advisers who can help them put together holistic financial plans that meet their needs today and in the future," Sonn says.

"All of us need to give serious consideration to the importance of setting up household budgets to live within our means and not get deeper into debt, settling debt, saving for an emergency, saving for the future, and other needs such as life and disability cover . and drafting or updating a will."

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