We tend to think of wealthy people as being lucky because they can afford to spend their money on anything they like. Well, that’s all a misconception: wealthy people don’t spend carelessly because they have money; they have money because they don’t spend carelessly! Becoming financially independent starts with healthy saving habits and the sooner you cultivate these habits, the wealthier you’ll become in the long run. Let’s take a look...
1. Start early but know that it’s never too late to start
The earlier you start, the more you’ll benefit from the exponential effects of compound interest. There’s always something to save for and no matter how young you are, you should focus on one day being able to afford life’s larger necessities, such as a house. Having said this, don’t lose heart if you haven’t yet started saving. It’s never too late!
2. Know the difference between wants and needs
Successful savers are able to distinguish between want and need and it’s this intelligence that prevents them from making spur-of-the-moment, impulse purchases when they go shopping. It’s also the source of patience that allows them to save up for the things they want, rather than simply pulling out the credit card.
3. Set up an automatic debit order
Setting up a monthly electronic debit order enables you to prioritise saving, while eliminating the guesswork of how much you can afford to spend on entertainment and pleasure. It also eliminates spending temptation, since that money will be automatically taken out of your account (out of sight, out of mind) and deposited into a savings account.
4. Avoid credit card debt
Banks charge exorbitant interest rates on credit card debt, so if you don’t stay on top of your payments, you could find yourself spending up to 20% more on the items you purchase. This simply isn’t smart. Pre-load your credit card before you use it and if you can’t afford something, save up for it rather than spending the bank’s money.
5. Keep a budget and close track of your spending
Keeping a detailed budget is great for helping you plan your spends but it also helps you see where you might be unnecessarily leaking funds. Taking a look at your monthly spends on, for example, take-out lunches might shock you into preparing your lunch at home instead. R50 on a store-bought meal might not seem like much at the time until you tally this daily expense up for the month. Scrutinizing your spends and deductions might also reveal hidden expenses you didn’t know about or had forgotten, such as a subscription you no longer use. Establishing a budget and keeping track of your spending will help you to tighten your belt and save smarter.
6. Always be on the lookout for deals and join reward programs
There are hundreds of Rands to be saved every month simply by joining the rewards/loyalty programs of the brands and stores you frequent. Almost every major retailer in South Africa has some sort of points rewards system for shoppers, which, if you sign up for and learn about, can help you save. A great example is the Vitality program, which you should make full use of if you’re on Discovery Health insurance. Vitality is an incredible source of savings on gym memberships, local and international flights, healthy food, Clicks shopping, and much more . Always be on the lookout for deals!