Five rules of successful saving


Five rules of successful saving

When it comes to saving, there’s no such thing as an “all or nothing” approach. Saving doesn’t have to be extreme and the changes don’t have to happen overnight. However, follow these five rules for creating a successful and realistic money saving plan, and saving could quickly become a way of life for you.

The key to developing a successful saving plan is to visualise where you want to be in a specified period and take the necessary steps to get there. One of the most important things to do is to conduct some research to identify the best savings account for your needs, taking into account fees and interest earned.

Below, we’ve put together five rules that answer the question: How to save money?

1.       Start with the end goal in mind

Motive is the difference between being interested and being committed to seeing something through. If you have a big enough ‘why’, then figuring out how to save money won’t be a problem. Write your goals down, tell people about them and be fully committed!

2.       Understand your cash flow

Put some effort into understanding your spending patterns and habits. Checking in on your spending every week as opposed to a monthly review, makes it easier to find traces of overspending.

Spending less inspires more savings. Find ways that you can get the same products and services for less. Try renegotiating the terms with your insurance company, cellphone provider, and even big-ticket items such as monthly rent. It may seem like a far-fetched idea, but you won’t really know the outcome if you don’t ask.

Don’t forget to analyse the rest of your recurring expenses. Do you really need that membership to that high-end gym when you only go a few times a month? Could working out at home help save you money?

You don’t have to give up all the things that make you happy. Sometimes you just have to find a more cost-effective way to enjoy the same activities.

3.       Pay yourself first

According to UCLA instructor Samuel Rad, “this is the idea of always cutting out a part of your paycheck and putting it aside before you spend money on other things.” Create automatic debits, taking the money out of the account in which your salary is deposited and moving it to your selected savings or investment account.

In his book, The Richest Man in Babylon, George S. Clason outlines the 10% rule – save a minimum of 10% of your income for your future needs. Consider it “Me Tax”, an essential investment in your future. Most people will automate their bond payments to ensure they aren’t late on those, but only a small number of them will do the same when it comes to their savings.

4.       Handle your debt

Get a handle on all the details regarding your debt situation. From your student loans to the balance on your car or house loan and outstanding credit card debt, make sure you understand how much you owe and at what interest rate. Next, see how you can minimise the intensity of that debt.

You can go about your debt situation using three basic strategies; pay-off the high-interest-rate debts first or begin with the smaller balances (snowball method); or consolidate your debt into one loan. The idea here is to feel motivated and powerful and to acquire the momentum to fight on when you’re done paying off a debt.

African Bank’s Consolidation Loan enables you to combine up to five loans to the value of R250 000. The benefit is that your debt will be easier to manage and you could enjoy a lower interest rate.

5.       Avoid lifestyle inflation

Lifestyle inflation is when your standard of living increases with your income. Although a gradual process, its effects can be just as long-lasting and damaging; buying a bigger house or car than you need, increasing your credit card balance, financing more items, eating out more… you name it.

The most effective way to do away with lifestyle inflation is to ensure that as you start earning more, the amount you save increases too. For example, if you get a 5% salary increase, be sure that the amount you save every month increases by 5% too.

Up Next

Grow your money
The flexible nature of working from home is appealing for new moms and many opt for this when the pitter patter of little feet is on the horizon.

Publish Date: 17/04/2018
Read more
Getting to know Basani Maluleke
A new era started at African Bank on 1 April 2018, the day Basani Maluleke, was appointed as our CEO. Basani follows in the footsteps of Brian Riley, who saw the Bank through curatorship and laid the foundation for the exciting future that lies ahead of us.

Publish Date: 01/04/2018
Read more
Three tips: How to use your credit card wisely
There are more than 8.8 million credit cards in issue, and more than 38 types of credit cards available in South Africa. South Africans have on average one credit card. So. Question is, are you using your credit card wisely?

Publish Date: 22/02/2019
Read more
Dad, here’s how you can be your child’s financial superhero
Fathers are often their children’s first real-life superheroes.Children do as we do, not as we say. So dads, our question to you this month is – are you modelling good financial behaviour?

Publish Date: 04/06/2018
Read more
Saving to educate your children? Get the most out of your money
There is no greater gift that you can give your child than the gift of a secure education.We all want to give our children the very best, however, ensuring that you give your child a quality education costs money.

Publish Date: 09/07/2018
Read more

About African Bank

Our mission is to be a successful Retail Bank offering a wide range of products and services to the consumers of South Africa. The people who work for African Bank represent the diverse population of South Africa; therefore we are a reflection of you, of all South Africans. We seek to provide value - more than our consumers expect of us. We promise to live our purpose 'humanity through banking' in all that we do and we are confident that we can, because 'We are You'.