How to save when you don't have money

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Saving is not necessarily dependent on income; it is largely dependent on willpower and discipline, according to the South African Savings Institute CEO Gerald Mwandiambira.

With July being Savings Month Mwandiambira said the reality is that willpower can be difficult and hiccups in commitment to save can lead to failure.

“The way to overcome failure in saving is to find ways that will strengthen and help you to become more disciplined.”

Mwandiambira gave the following tips:

  1. Automated Savings: Debit orders to Savings Accounts allow automated saving. You can set up debit orders Tax Free Savings Accounts (TFSA), 32 Day Notice Accounts and Unit Trust Accounts.
  2. 13th Cheque: Ask your employer payroll to save for a 13th cheque paid to you in December by lowering your salary. This extra pay cheque will allow you to ride out the Festive Period and New Year expenses without major impact on your finances.
  3. Pension Fund Contributions: When starting a new job, ask your employer to default to the highest allowable retirement fund contribution percentage of your income. You can also ask your employer to review your current contribution. Best of all, all retirement funding contributions are tax deductible annually up to R 350 000.
  4. Group Savings: Start or join a Stokvel or Investment Club with family and friends. The group will encourage you and allow you to develop the discipline required to be a regular saver.
  5. Savings Buddy: Ask a friend to be a savings buddy whom you meet with regularly to discuss your savings journey. By holding each other accountable, you can help each other to grow wealth.
  6. Baby Gifts:  You can seed a child’s future savings by requesting baby gifts of cash to deposit into TFSA or even taking out a Retirement Annuity (RA) for a baby.
  7. Children: Open TFSA Accounts for all your children to maximise the benefit they receive from these accounts. Set up debit orders to contribute to these accounts as they grow up together with cash gifts they receive on birthdays etc. You can encourage grandparents and other family to also contribute regularly.
  8. Domestic Help: Set up a Savings account or Retirement Annuity for your domestic helper. These important members of our families are often forgotten in future planning.
  9. Retirement Fund Statement: By receiving your retirement fund statements monthly or quarterly, you can be encouraged to keep track of your savings to ensure that you have sufficient income when you retire.
  10. Financial Products and Insurance: Shop around and use a financial institution that rewards consistent savers either through a high savings interest rate or cash back for no claims.

Mwandiambira says that it’s important for South Africans to look towards developing innovative savings alternatives and reinforcing positive savings behaviour. 

“Cultivating a culture of savings and promoting alternative savings solutions in all spheres remains the focus of SASI and our dedicated partners.  Savings Month has been designed to remind consumers to strive towards financial freedom and move away from remaining continuously vulnerable,” said Mwandiambira.

-This article was originally published in the GCIS Vuk'uzenzele.

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