The South African Savings Institute (SASI) chose July as the National Savings Month in a bid to encourage South Africans to focus on alternative savings solutions. A panel of industry experts discussed developing alternative mechanisms to help South African consumers – already under pressure and over-indebted – to save.
According to the SASI Chairperson, Prem Govender, consumers will be under financial pressure and need to improve both knowledge and attitudes to saving due to South Africa’s ratings downgrade and the subsequent effects on the economy. Govender explains that Savings Month has been designed to remind consumers, via the media and other channels, to strive towards financial freedom or remain continuously vulnerable. Cultivating a culture of savings and promoting alternative savings solutions in all spheres of life is the focus for 2017.
Here are a few tips from SASI to not only help you save, but to save in new and creative ways. Admittedly some of these may seem like a bit of stretch, but remember that short-term sacrifices lead to long-term rewards.
1. Set a target
The reason why many of us do not save is because we do not have set targets. It is important to set and write down important savings targets such as an emergency fund, a holiday fund and other targeted savings.
2. Automated savings
Debit orders to savings accounts allow automated saving. You can set up debit orders for Tax-free Savings Accounts (TFSA), 32 Day Notice Accounts and Unit Trust Accounts.
3. Your 13th cheque
Ask your payroll manager to save for a 13th cheque, paid to you in December, by lowering your salary. This extra pay cheque will allow you to ride out the festive period and expenses in the new year without these having a major impact on your finances.
4. Pension fund contributions
When starting a new job, ask your employer to default to the highest allowable retirement fund contribution percentage of your income. You can also ask your employer to review your current contribution. Best of all, all retirement funding contributions are tax deductible annually up to R 350 000.
5. Financial Wellness days
Ask your employer to give mandatory time off to review your finances with a financial planner once a year. Regular meetings with a certified financial planning professional will help you remain in control of your finances.
6. Group savings
Start of join a stokvel or investment club with family and friends. The group will encourage you, and allow you to develop the discipline required to be a regular saver.
7. Savings buddy
Allow your partner or friend to be a savings buddy whom you meet with regularly to discuss your savings journey. By holding each other accountable, you can help each other to grow wealth.
8. Baby gifts
You can seed a child’s future savings by requesting baby gifts of cash to deposit into a TFSA or even taking out a retirement annuity (RA) for the baby.
Open TFSA accounts for all your children to maximize the benefit they receive from these accounts. Set up debit orders to contribute to these accounts as they grow up, together with cash gifts they receive on birthdays and other occassions. You can encourage grandparents and other family to also contribute regularly.
10. Domestic help
Set up a savings account or retirement annuity for your domestic helper. These important members of our families are often forgotten in future planning.
11. Retirement fund statement
By receiving your retirement fund statements monthly or quarterly, you can be encouraged to keep track of your savings, to ensure that you have sufficient income when you retire.
12. Financial products and insurance
Shop around and use a financial institution that rewards consistent savers, either through a high-savings interest rate, or cash back for no claims.