Saving up to buy your first car is such an exciting goal! It may not be easy, but each step of the way is an achievement in itself. From setting up your savings account to making monthly transfers, every action you take is a lesson in how to achieve your financial freedom. At the end, your graduation present is a shiny new set of wheels!
Finding the best savings plan and deciding on what account to use is the first step. Having a MyWORLD account at African Bank will give you 5.5% annual interest on your money as well as the ability to open linked accounts for specific goals. If you create a Savings Pocket for your car savings, you’ll earn 6.5% and have full and immediate access to your funds.
These are the best bank savings interest rates in South Africa, allowing your money to grow at a faster rate while you prepare to step into your dream.
How do savings accounts work?
A savings account is just what the name says! It’s an account that you set up in order to save money. This is not your MyWORLD everyday transactional account, but a separate Savings Pocket into which you can transfer money whenever you have spare cash.
The purpose of a savings account is to keep your savings from getting lost in your day-to-day transactions. It’s hard to keep track of special savings if all your money is in one account and you could easily think that you have more to spend than what you had planned for.
What is the best way to save money and earn interest?
The best way to save money and earn interest is to simply transfer your money into a savings account and then leave it for as long as possible. The more you save and the longer you keep it, the more interest you’ll earn!
If you have R10 000 in your savings account and earn R54 interest in the month, it means that you start the next month with R10 054 and will earn around R54.50 the following month. Each month, you earn a little more interest — this is called compound interest.
R10 000 left in your savings account for a year with an interest rate of 6.5% would earn you around R669 in interest. That’s literally free money!
Some money saving strategies
Saving up for your first car, or any other goal, requires a good money saving strategy and a decent dose of dedication. It helps to write down why you are saving towards your goal, how it will make you feel when you achieve it, or the difference it will make to your life. Stick this up somewhere where you can see it and regularly remind yourself of why you’re saving money.
A great strategy to help you save money is to track all your expenses and actually see where your money is going. This can often help you find better ways to manage your money and free up some spare cash.
Another good strategy to employ is to pay yourself first. After working out how much you can realistically save each month, transfer that money to your savings as soon as you receive the income. That way you can’t spend it on other things you haven’t planned for.