Money saving habits to help you stay on top of life’s everyday moments

Tawanda Rumhuma, the Executive for Savings and Investments at Absa Everyday Banking, gives some money saving tips this Savings Month!

“It is well documented that South Africa has one of the lowest savings rates among its peers globally. However, more consumers in South Africa are shifting towards a culture of accumulating savings, and Absa is seeing this in the volumes of savings accounts that have been opened, especially in this period since the COVID-19 pandemic lockdown,” says Tawanda Rumhuma.

Cultivating a savings culture is not easy, but it’s possible. You just need to be intentional, disciplined and consistent. The time it takes to form a financial habit is different for every individual and can depend on many factors, including your motivation and the complexity of the habit itself. While there is no specific timeline, research suggests that it takes 66 days on average for a habit to become automatic.

Start by taking a simple approach, and don’t over-complicate it. Make it measurable, because something you can’t measure or quantify later will always be difficult to follow through on.

Below are some simple first steps you can take to change your money habits for the better. Remember to start small, because a small change can make a big difference.

• Set clear goals
  What are you saving for? Are you saving for short-term goals like a wedding or an overseas holiday, for long-term goals like education or an early retirement, or for emergencies? If you start with the “why”, you will be able to develop a plan that will help you stay the course. Psychologically, the “why” is also a motivating factor – you must have something to work towards and a clear plan you can track.
• Invest time in your financial health
  For anything to be achieved, you need to invest time in it. This applies to your finances too. Put aside a little time every week. Call it “Financial Self-care Saturday” (it is a form of self-care, after all) and use that time to interrogate your spending habits for the week. Did you buy things you wanted but didn’t really need? Did you overspend on dining out? Did you make uninformed buying decisions? Understanding your money habits is an essential step, because you need to know what a habit is before you can break it. By doing this, you’ll learn to better understand your attitude towards money and figure out what you need to change.
• Look at your bank statement monthly
  Examine every single transaction. Your bank statement is the key that unlocks the secrets to your financial habits. By looking at each transaction on your statement, you’ll know exactly where your money goes and where you might be able to save some. It will give you details about fees you’ve been charged, double debits and even fraudulent charges. It will also show you any subscriptions you have that you no longer use or need. We often forget about these, and cancelling them is a great money saver.
• Start budgeting
  At the word “budget”, you’re probably pulling your hair out. Yes, it’s boring. Yes, it’s mundane. But it’s the most important part of your financial journey. Effective money management starts with a budget. By creating a budget you’ll see exactly how much is coming in, how much is going out and what you’re spending it on. Budgeting also helps you plan better. It allows you to track your expenses and see where you can save to meet your financial goals.
• Pay yourself first
  This is part of your financial self-care. Instead of waiting until the end of the month to see what money you have left over to save, set up a recurring payment for the day after pay day. This way, your savings become part of your regular expenditure. The benefit of this is that there is no temptation to spend what you had planned to save.
• Shop with a plan
  All too often we head off to the shop with no real plan, then we wander the aisles and purchase whatever takes our fancy. Sometimes we even forget to buy what we originally went to the shop for. Having a shopping list prevents unnecessary purchases and keeps you on track. And the small savings you make by not being distracted by other items will add up.
• Stick to a debt repayment plan
  If you have debt, it’s a good idea to pay it off as quickly as possible. Pay off high-interest debt first because it will save you money in the long run (by saving on the interest) and help you become debt-free faster, which will free up more funds to save.
• Invest in insurance
  When times are tough, we often try to cut expenditure we don’t think we need. Insurance is often the first thing to go. After all, you’ve been paying monthly and you haven’t needed it yet, right? But the truth is that life happens, and insurance can cover you when you need it most. Insurance is a cornerstone of the financial emergency assurance truths (FEAT) triangle, which makes for a firm financial foundation. What you can’t solve with your savings buffer needs to be solvable with insurance. Not being able to cover these financial setbacks is a recipe for disaster. To find out more about FEAT, take a look at Absa’s Savings and Investments newsletter, In Your Interest. You can read it at absa.co.za/savings-and-investments-newsletter.

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