Do you have the ‘I must have this now’ culture?

It’s no secret that South Africa remains a consumption-led country, with strong contributing factors that affect our savings culture. This contributes immensely to how the youth spend their money. In short, South Africa’s savings culture is in desperate need of intervention – which comes in the form of financial literacy and education.

For South Africa’s lower income earners, the notion of saving is perhaps not a priority because of a perceived inability to afford a particular standard of living: people spend first and then save, which is the wrong way to secure financial freedom. We need to learn to save first and then spend, even if that means only saving R2 of R20. Here’s a quick metaphor: when you’re on a diet, step on a scale and see that you’ve lost weight, you feel encouraged to keep pushing on, right? The same principle applies with your finances.

Following the 2008 banking crisis and recent economic downgrade to junk status, individuals are more guarded about where they invest, often mistrusting financial institutions and the advice they receive. They then either procrastinate or do not save at all, which all adds to the confusion around whether saving is really the best thing to do.

It’s all about attitude and habits because budgets take a hard hit and savings suffer due to unnecessary expenditure. Most people intuitively understand that they need to save ‘a little portion of their income’ at the end of the month, but this often doesn’t work as there are always other expenses lurking to eat into whatever is available. As a result, people never reach a point where they are financially secure.

Also acting as an impediment to saving is the relative ease of access to credit and to retirement funds when changing jobs. Recent strides by National Treasury to incentivise savings in the form of tax-free savings accounts could help push young people in the right direction, but even this initiative doesn’t necessarily provide a solution to the country’s poor savings culture.

By implementing the following methods to make savings a habit, however, you will be well on your way to building a more secure financial future for yourself:

• Choose a new account – preferably one that’s harder for you to withdraw from – and then make an initial deposit. It doesn’t seem worth it to deposit a small amount, but getting started is an extremely important first step.

• Minimise your debts by not running away from your creditors, but rather committing to paying your debts on time. It’s important to take an honest look at your problem and list all your debts, their balances and interest rates and include the minimum monthly repayment for each.

• Sign a debit order in favour of a unit trust fund that ensures higher returns above inflation and more than what an ordinary bank savings account would give you.

Here is a problem so many of us run into: we have a lot of credit card debt but even when we make a payment onto the card, we just end up spending on it again – making it a vicious cycle of debt. The solution – or at least what we believe will work best for you – is to change bad habits by spending less on retail credit, gadgets, cellphone or car upgrades and trying to live on less. You need to remember there is no timeline here because ultimately the quicker you perform all of these, the more you’ll save this year, says Cele.

Once you’ve figured out how much you are saving from some of these new changes, don’t forget to reward yourself with a treat – within your means and not involving credit – like going to the movies or taking that special someone out to dinner.

It is very difficult not to get caught up in the consumerism and desires of our society, but having solid money management skills will help you keep yourself afloat. This is not a problem that will go away overnight, but as individuals we do have control over the financial choices we make and the biggest mistake is never really getting started.