‘Can’t af­ford to save’ is not an ex­cuse

Weekend Argus (Saturday Edition) - - GOODPUZZLES -

Two of the main rea­sons peo­ple aren’t us­ing tax-free sav­ings ac­counts is that they don’t know about them, or they don’t know enough about them, and they be­lieve they do not have enough money to save. But com­mit­ting to sav­ing is of­ten a mat­ter of get­ting your pri­or­i­ties right.

Did­in­tle Mokonoto, a fi­nan­cial ad­viser at Alexan­der Forbes Fi­nan­cial Plan­ning Con­sul­tants, who holds the Cer­ti­fied Fi­nan­cial Plan­ner ac­cred­i­ta­tion, says any­one can save some­thing, no mat­ter how lit­tle they earn.

She says the key is to save be­fore you spend. “If you save a por­tion of your in­come as soon as you get paid, you won’t have a chance to miss it, and you’ll be free to spend the re­main­der on your needs and wants, with less anx­i­ety about the fu­ture.”

Sav­ing reg­u­larly is a great way to pay for ex­pen­sive items that you may not be able to af­ford im­me­di­ately, such as a car, hol­i­day or wed­ding.

“You could use your credit card to pay for these ‘want items’, but this will end up cost­ing you more be­cause of the in­ter­est payable.” It can also lead to debt prob­lems if you don’t man­age your re­pay­ments prop­erly, Mokonoto says.

When you save, the com­pound­ing ef­fect of the in­ter­est or re­turns you earn works in your favour, but when you bor­row, the in­ter­est com­pounds in favour of the bank or loan provider.

Mokonoto says peo­ple make ex­cuses, such as: “I’ll save when I get an in­crease, when I get to a cer­tain age, when I sign that big deal, or when I’ve paid my car off.” But these ex­cuses will not mo­ti­vate you to start sav­ing.

Sav­ing and bud­get­ing go hand in hand. If you learn how to bud­get ap­pro­pri­ately, you will know that ev­ery month a cer­tain por­tion of your in­come is go­ing to your sav­ings, Mokonoto says.

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