THE ART OF SAVING MONEY

Most of us were told by our elders to start saving and planning for our future early on. Unfortunately, few of us listened. There’s always a reason NOT to save. You feel that you don’t earn enough, unexpected expenses thwart any attempts to put money away, or you tell yourself that there’s still plenty of time to save. But the reality is that it’s best to start saving as early as possible. Here, we collaborated with Old Mutual to bring you a short how-to guide on how it’s possible.

Prioritise saving

It’s as simple as that. If you were to take a look at what you spend your money on, I can almost guarantee you that there’s some area where you can cut down. How often do you buy lunch instead of bringing leftovers from home? Do you have a gym membership that’s largely unused? Do you eat out with friends often? If you can learn to cut down on the luxuries, set realistic goals for yourself and make saving a priority, you’ll soon realise that your ability to save is often determined by willpower.

Set achievable goals

While it’s great to have big dreams and long term goals, your more immediate goals need to be realistic and obtainable. To determine your monthly savings goal, you’ll need to revise your budget. Start by listing the basics, such as your essential monthly expenses. Then, set aside money for the odd things that crop up every now and then – a couple of new clothing items at the beginning of a new season for example. Remember, this is going to be about prioritising. Do you really need a new laptop, or can that wait until you’ve serviced your car? When all that’s been deducted, look at what you have left. That’s your monthly savings goal.

Debit-order your savings

This strategy can help two kinds of people: those who sometimes forget to save each month, and those who tell themselves that they’ll just “save whatever is left”. There is, of course, never anything left at the end of the month, which is why it’s better to automate the transfer of your savings to your savings account. Set this to go off at the beginning of the month so that you aren’t given a false impression of how much disposable income you have. This way you’ll also get used to seeing less money in your account and will adjust your spending habits accordingly.

Squeeze that budget

Even though the biggest savings will be made by cutting back on luxuries, you can also make significant savings on your regular monthly expenses. Here are just three of many areas in which you can save.

–       Groceries

Start planning your meals around food items that are on special and you’ll start seeing significant savings. Almost all the stores run weekly or monthly promotions. Look at what’s on and how you can work around it. Buying in bulk also tends to save money, but this is not always the case. Look very carefully at the per gramme price. And don’t ignore those loyalty points. Those also add up.

–       Water

If there’s one thing that the recent spate of droughts has taught us, it’s to start using water more wisely. Not only is this good for the planet, but it’s lighter on the pocket too. There are many ways to decrease your water bill – from taking shorter showers, to only washing your clothes when you have full loads. And while some of the changes may be small, you’ll soon see how you can easily save money in this department, especially if water rates go up as expected.

–       Electricity

Electricity bills have a way of growing exponentially if your power usage goes unchecked. But, electricity can also be one of the easiest areas to save on. Make sure you switch lights off when you leave a room, fit your lights with energy-saving bulbs, and consider installing a pay-as-you-go electricity system so you can better keep tabs on what you are spending (if you are renting, discuss if this with your landlord). Every little change helps save money, and over the long-term, that can add up to a significant sum.

Bank any money you have left

If you give yourself a budget, set realistic goals, and stay focused, you’ll see significant savings, possibly even greater than the goals you set. The challenge then is to put away your savings before you spend them. Make a habit of putting any money left over at the end of the month into your savings account. Don’t do tempted to ‘reward’ or impulsively splurge. Remember your goals and long-term rewards. If you are saving up for a house or car, pin up a picture of the object of desire where you will be reminded of it daily.

Open a savings-focussed bank account

Another way to optimise your savings efforts is to open a bank account designed to help you save. The ideal bank account is one that offers reduced fees and a savings function that helps you grow your money. Low-cost bank accounts boast low banking fees, free swipes and online purchases, and low withdrawal fees. For more on the benefits of low-cost bank accounts, read this article about how to choose a low-cost bank account.

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For more useful money-related tips, sign up for the Old Mutual Money Mailer. In this free monthly newsletter, you’ll find articles on topics ranging from borrowing to saving and everything in between. If you’ve ever wanted to know how to save for university, how to choose a second hand car, or how to improve your credit score, the insights in these articles can leave you wiser, wealthier, and better equipped to make the most of your money.

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