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Saving tips to boost our financial standing

- BY JANINE HORN Janine Horn is a certified financial adviser from Momentum Financial Planning. IOL Business

WHEN planning for the future, having an end goal in mind is essential on your journey to success. When it comes to our finances, saving is the reason we plan, but South Africans are finding saving to be an unattainab­le goal.

The SA Reserve Bank’s Quarterly Bulletin revealed that only 13.3% of South Africa’s GDP is saved. Some of the world’s top national savings rates are between 64% and 44%, which indicates that South Africans severely lack a savings culture.

A savings plan is a way to grow your money in order to reach the financial goals you set for yourself. It pens down, in detail, the goal in question and what is required to achieve the goal.

Here are four steps you need to know when setting up a savings plan:

Step 1: Look at your budget

Your budget demonstrat­es your current financial picture. Carefully analyse your budget and comb through all your expenses, then decide how much money you are willing to put aside every month.

If you do not have a budget, your bank statements can provide insight into your expenses.

If it seems like you do not have enough to save, try cutting down on your necessary expenses.

Step 2: Establish your goals

Decide whether you are saving for a short-term goal, such as buying a car, or a long-term savings goal, like your retirement. Usually, long-term goals do not require immediate cash, and you have a longer time to save for these.

Using the age-old “Smart” approach when setting up goals is essential. Smart stands for Specific, Measurable, Achievable, Realistic and Time-bound.

Now that you know how to establish your goals, the next step will help you to decide how to reach these goals.

Step 3: Decide how much to allocate to each goal

If you are saving for numerous goals simultaneo­usly, it is vital to write down how much you are saving towards each goal.

For example, if you are saving for a car, your child’s education, holidays and emergencie­s simultaneo­usly, you need to determine what is a reasonable and realistic amount to meet the demands of each goal.

Step 4: Determine where you will keep your savings

Once you have decided how much money you will allocate to each goal, you can weigh your options regarding where you will grow your money.

When saving, there are numerous options, such as a savings account, money market, tax-advantage account or taxable investment account.

These options provide different benefits, and it is crucial to analyse each option carefully and decide which option will allow you to maximise your savings.

Speak to your financial adviser at the beginning of the process. They will guide you every step of the way, consistent­ly evaluate your savings plans and ensure you are on track to achieve the savings goals you set, guiding you on your journey to success.

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