For many people, saving is a tedious task that they often consider last when they get their paycheque at the end of the month.
The reality is that there are numerous simple ways to save more money every month.
African Bank Group Executive Alfred Ramosedi says many people make the financial error of using money that should go towards savings and investments for entertainment and other luxuries.
Smart saving includes budgeting, investing and avoiding too much debt.
Ramosedi says:
“Drawing up a budget is not an intensive and confusing task people think it is and the application of a simple rule is one sure way of organising your finances for good. It is the 50/20/30 rule.”
This rule basically states that 50% of your salary should go towards fixed expense, 20% towards savings and investments and 30% for additional costs.
Make a budget. It should be comprehensive, honest and accurate. You should be clear about how much you are spending on a monthly basis and how much money you’re actually bringing in. This will help you find where you can save more money.
Strike a balance. Try to avoid overspending and saving at least 15% of your salary every month.
Smart saving means putting your money where it will grow. Invest money on the equity market.
Avoid plastic money – use real money. Giving away your hard-earned cash is harder than swiping your plastic card. Using cash has a psychological effect in the sense that it keeps your spending habits realistic. You may be less likely to overspend by using cash to make purchases.
Compare prices when shopping. This is one of the easiest ways to save money, because you can find ways to save more money by taking advantage of discounts.
Never buy something you don’t need just because it’s on offer. Avoid impulse buying.