Alternative savings solutions
Many South African consumers are starting to realise the importance of longterm savings.
“Most South Africans struggle to save not only due to income challenges, but also a lack of willpower and commitment,” said Prem Govender, chair of the South African Savings Institute (SASI).
Govender was speaking at the launch of SASI July National Savings Month.
SASI presented 12 ways in which South Africans who have difficulty in saving, can save.The key is automated saving.
Alternative saving methods
Set a target: Many of us do not save 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. Do you know your targets?
Automated savings: Debit orders to savings accounts allow automated saving.You can set up debit orders, tax-free savings accounts, 32-day notice accounts and unit trust accounts.
Baby gifts: You can seed a child's future savings by requesting newborn gifts of cash to deposit into tax-free savings accounts.You could even take out a retirement annuity for a baby. Children: Open tax-free savings accounts for all your children to maximise 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, etc.You can encourage grandparents and other family to also contribute regularly.
Thirteenth cheque: Ask your employer to save for a 13th cheque, to be paid to you in December, by lowering your salary. This extra pay cheque will allow you to ride out the festive period and New Year expenses without a major impact on your finances. 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. Retirement fund contributions are tax deductible annually up to
Group savings: Start or join a stokvel or investment club with family and friends.The group will help you develop the discipline needed to be a regular saver. 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.
Savings buddy: Ask your partner or a friend to be your savings buddy, and regularly discuss your savings journey together. By holding each other accountable, you can help each other grow wealth.
Information provided by the South African Savings Institute