Save for your rainy days and banish Januworry

JANUARY is coming to an end. School fees and stationery have drained most of us. Some have already received their first paycheques for 2017 and what a relief it is for most people.

Mashonisas are busy doing collections and it seems that we will never get out of that debt trap.

Walking in the corridors of Joburg, you often overhear strangers talking about the difficult month of “Januworry”.

If you are not familiar with this slang, it simply captures the feeling of most South Africans as they come to grips with the reality that they have little cash or savings to tap into as reckless spending during December rears its ugly head.

Year-on-year, this phenomenon repeats itself. At this point you are also probably wondering why it is that South Africans do not put money aside for rainy days, for retirement or any other unforeseen circumstance?

Studies conducted by Old Mutual reveal a worrying picture about the culture of putting money aside in South Africa.

First, families spend 65% of their income on consumables and living expenses.

Second, 50% believe death and funeral cover are more important than retirement savings, and only 31% save for retirement.

This trend worried government to such an extent that in 2015 and in collaboration with banks, a tax-free savings account was introduced. The success of this initiative is still a matter of speculation.

What we do know is that this trend cannot continue if we are to prepare a better future for our children.

What you can do to ensure that you and your family are better prepared for rainy days:

Teach your children the art of saving through earning an allowance by performing chores around the house. Instead of paying the full allowance, each child should have a piggy bank where they deposit a portion of their allowance.

No matter how little you earn, start by putting away as little as 10% of what you earn.

You are probably already contributing to a stokvel, or you have a funeral policy for the family. This is a good start but get the services of an advisor to assess whether you are not overpaying for these services.

Your employer will typically have a wellness programme through which you can access the services of a financial advisor – use this service to your benefit.

Resist buying big items, such as that new plasma TV or a new bed, on credit. Always put money aside and delay purchasing these items until you have saved at least 50% of the total price of the item.

Start with these simple, easily achievable techniques and watch your piggy-bank grow.

Families spend “65% of their income on consumables and living expenses