Saving step by step – advice from SASI experts and partners
Step one: Set clear financial goals
You need to plan your short-term goals (less than five years) where saving money is more important than growing it. This can be settling a debt and putting an emergency fund in place or saving for an overseas holiday. Your medium-term goals (five to ten years) require you to balance the security of your money with growing its returns. This may include making provision for your children’s education or buying a car. Your long-term goals (more than ten years) are where the returns on the money you have accumulated count most – here we’re talking retirement planning or settling your home loan.
Step two: Track your spending and create a realistic budget
You must have a very clear picture of how much money you earn, what you spend it on and how much can be saved. It also helps you cut expenses. Part of this budget exercise is to face the harsh reality of the dent debt makes in our cash flow situation.
Step three: Get rid of toxic debt
As far as expenses in your budget go, there is a huge difference between a food bill and debt repayment. Hopefully, your debt had a very relevant purpose initially, but repaying it at a high-interest rate makes an ugly dent in a monthly budget. Focus on one debt at a time, focusing first on those with the highest interest rates.
Step four: Plan for risks
Build up your savings by having an emergency fund available for the next time you face some unexpected nasty financial surprise. This is where insurance also becomes a critical tool in your financial plan: it gives you the opportunity to transfer the risk.
Step five: Start saving and find your #crazywaystosave
You have identified your goals, used your budget to determine and free up excess funds by getting rid of debt and managing your expenses, and covered your risks as best as possible. Now the only thing left is to do is invest your surplus funds to reach your financial goals and dreams.
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