Create a savings culture and start saving! World Savings Day: 31 October 2016
It’s no secret – when you save money, you create a safe financial future for yourself and your loved ones. Although you may find it difficult to save, sometimes you only need a catalyst to provide the much needed motivational boost to start saving. DebtSafe therefore urges all South Africans to start a savings culture by celebrating World Savings Day with us on the 31st of October 2016.
This special day was established in Italy on the 31st of October 1924 during the first International Savings Bank Congress. Today World Savings Day mainly focusses on developing countries, where people are inspired to double the number of savings mechanisms they use. Ultimately, the purpose of this day is to emphasise the value of saving money and how you can benefit from it in the future.
Wikus Olivier, debt management expert at DebtSafe, reminds consumers that they don’t necessarily have to deposit a large sum of money into a savings account or money market. A few bucks a month is still a very good start. Experts recommend that consumers should save at least 10 to 20% of their nett salaries, even before any living expenses are paid for. The percentage can vary slightly, depending on the circumstances: a twenty-year old’s ideal savings amount would, for example, differ from that of an older person’s amount.
As it is often the case, it is easier to keep going with something that is difficult, if you know why you are doing it – and it is the same with savings. There are several objectives why people save, for example for children’s education, retirement, cars, houses and other short-term goals namely holidays. So set clear goals for your budget so that you can see exactly what is going on, remembering that it’s important to prioritise your objectives: for example, paying off an expensive loan should take precedence over saving to purchase a luxury item. You can also add a timeline to your savings plan to show how much time you have to reach each savings goal and to keep you motivated.
Various savings options are available
There are different saving mechanisms available to South African consumers, including cash at home (in a safe), savings accounts, money market options with banks, retirement annuities, endowment policies and unit trusts. Consider each mechanism’s pros and cons before deciding what will work best for you. Money boxes or piggy banks are ideal to teach children to save from a young age, while adults can use a safe. Unfortunately, there is a risk of possible theft involved and no interest will be earned. A savings account is a good option if consumers exceed the minimum balance on the account and there are nice low-cost savings accounts available for children. A money market account is ideal when you are able to deposit a few thousand rands all at once. Retirement annuities are specifically used when consumers would like to save for their pension, and endowments are essential when someone dies or is diagnosed with a critical illness. Unit trust investments give consumers immediate access to their money whilst growing at a steady rate, but they have to be able to deposit the minimum premium of about R500 a month.
Let’s get excited about World Savings Day and start thinking of ways to cultivate a savings culture in our own homes. However, if you find that it is impossible to save because your necessary expenses and debt premiums are more than your income, contact the friendly debt advisors at DebtSafe to assist you with their successful debt review program.