Tapping into savings will spoil your future plans
It is time to spend even more wisely
This year’s savings month comes at a time when saving is the last thing on most consumers’ minds with the cost of living having shot through the roof and more hardships expected as the year wears on.
Experts advise that while things are tough and many people are struggling to keep their heads above water, using your savings today puts pressure on your savings for your future.
Nico Burger, head of financial planning at employee benefits advisory firm, NMG Benefits, says now is the time to put your spending habits under the microscope, and learn to spend even more wisely than before.
“Take your bank statement at the end of each month and go through each line item. Calculate how much you spend on your needs and your wants. After a few months of carefully unpacking your spending habits, you will be able to see where your ‘leaks’ are – and once you’ve found those, you can work to close them.”
He advises that consumers consider the following measures to make sure they don’t tap into their savings:
• Set your own “cooling off” periods – and stick to them
When you want to buy something that’s costly, give yourself a period to think about it. Buying compulsively doesn’t give you enough time to truly evaluate if you need the item or if you want it. Compulsive buying also often leads to remorse because you haven’t done proper research. You may find a better quality product elsewhere else at a discounted price.
• Don’t reduce the amount you put away each month
The future is uncertain. You shouldn’t only be avoiding eating into your savings, but actually try to save more if possible.
• Preserve your retirement savings when changing jobs
The Association for Savings and Investment South Africa says a major reason for low savings is that members take their savings in cash when changing jobs. See your retirement savings as just that: savings for when you retire one day. Cashing out when you change jobs will only jeopardise your financial future. You will also lose out on compound interest, where you earn interest on your interest.
• Challenge yourself to cut your luxury spending
Each person has their own weaknesses. For the sport fanatic, it could be expensive running shoes; for the fashionista, branded clothing; for the adventurous, luxury holidays. Think about your weaknesses, challenge yourself to cut your spending on those items and redirect that money to your emergency savings account.
• Invest in a more economical vehicle
With the increase in the cost of petrol, it might be worth your while to investigate buying a more economical vehicle. This could save you a small fortune, especially if you can negotiate to work from home a couple of days in the week so that you can stretch your money even further.
• Talk to a financial adviser During these uncertain times, it is good to speak to your financial adviser. They are trained and qualified to support and guide you to reach your financial goals for the future. One bad financial decision today can affect your future. If you are consulting an accredited financial adviser, you won’t make emotional decisions based on the instability that we are all facing today.