Get into saving habit
JOHANNESBURG – Remain disciplined in fostering a culture of saving, especially during a challenging economic environment.
![](https://images.caxton.co.za/wp-content/uploads/sites/23/2016/07/FlorisSlabbert15_86621.jpg)
The South African Savings Institute launched its annual July National Savings Month Campaign which seeks to encourage people to save.
National sales manager at Ecsponent Financial Services, Floris Slabbert, believes that South Africans must remain disciplined in fostering a culture of saving, especially in the present challenging economic environment.
Slabbert said South Africans often did not understand the importance of short, medium and long-term financial planning. “This may be due to low levels of financial literacy and, as a result, the country has one of the worst savings rates in the world.
“The latest data from the Investec Gordon Institute of Business Science Savings Index shows that we are moving backwards; that South Africa’s savings are at a 20-year low. A score of 100 is considered a ‘savings pass mark,’ but we scored just 63 in the last quarter of 2015.”
He added that with household expenses on the rise it was likely that many more consumers would, unfortunately, abandon their saving initiatives in an effort to stretch their disposable monthly income.
However, the long-term benefits of saving cannot be stressed enough and Slabbert encourages everyone to save, even if they start small.
Five top savings tips to keep in mind this National Savings Month:
- Determine your savings goals: The amount you save will depend on your savings goals and the life stage you find yourself in – consider where you want to be in the next five to 10 years.
- Draw up a budget that prioritises saving: Most consumers do not plan and track their monthly earnings, which results in them being cash-strapped halfway into the month. To avoid this, set a realistic budget that prioritises spending and then sets enough aside for day-to-day living expenses.
- Distinguish the difference between wants and needs: A roof over your head, food on the table, healthcare, hygiene products and clothing are needs. Wants are usually closely linked to the needs and people want a bigger house, restaurant-quality food, branded clothing and fancy cars. Be sure we you can afford luxuries before treating yourself.
- Declare war on debt: Ridding yourself of debt is a giant leap towards financial freedom. One approach that yields fast results is to make a list of all your debt and then prioritise paying off the debt that attracts the highest interest first. Another approach is to pay off the smallest amounts of debt first.
- Consider tax implications: Spend time investigating the different tax implications applicable to the savings and investment products you’re considering to include in your financial plan. No one can avoid paying tax altogether, but with planning, you can find solutions that put the most money in your pocket. For example, tax-free savings accounts allow investors to invest a maximum of R30 000 per annum or R500 000 in their lifetime, with all the proceeds earned on this investment being entirely tax-free. However, bear in mind that if you exceed your contribution limit, Sars will levy a 40 percent penalty on the portion of the contribution above the threshold.
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