MOST people think you have to earn a lot of money before you can start saving.
But Ester Ochse, a product specialist at FNB Advisory said that is not true. She said the extent to which a person is able to save depends largely on their attitude towards money and not how much they earn.
“Some people don’t earn much but are able to build a solid savings base, and the reason for this is simple – they understand the impact savings can have on their finances. On the other hand, there are people who earn more but are not able to save. This is caused by a number of reasons.
“The reason most people are unable to save is because they spend first and leave too little to save.”
Ochse pointed out some poor choices that stop people from saving properly.
No realistic financial goals
For example, if you earn R5 000 a month, it is unrealistic to save 100% of your income every month – if you depend on it – but it’s certainly possible to commit to saving 10% or more, especially if you are financially disciplined.
Set goals that are reasonable when compared to your personal financial circumstances.
Delaying savings
Never delay saving because you are waiting for the day when you will have enough money to save. That day may never come.
The solution to this is to start small and build your savings slowly over time, and once you have developed a savings habit you can build better savings from there. You can start saving by saving as little as R100 a month.
Spending more than you earn
Stop living beyond your means. The rule here is simple: spend carefully and on items that you can afford and need.
Ignoring your wasted money
Conduct an assessment of your expenses to see where your money is being spent and if you are getting any future benefits from what you are spending it on.
By paying close attention to the money you spend and what you spend it on, you will notice that over the long-term you have prevented wasteful spending.
Not using the right savings tool
Research different types of savings options. Find those that are suited to you and can help you meet your goals over time. The type of account you choose as a platform for saving is a big financial decision and should be given careful consideration.
