What are savings?
Savings are the money one decides to put aside after they receive their paycheck or income from the side hustle. Think of the income and think of how much you can put away every month as well as how much you can have after 5 years if you are consistent.
What is the savings habit?
This is when you start putting aside a percentage of your income between 5-15% every month aside for your savings. It can be just any amount you feel you can afford. The important thing is to start so you can be able to cultivate the habit. Save the cents and then the dollars will generate themselves, also do not despise small beginnings.
Why do we do savings in the first place?
This money you put aside will be useful when you:
- Have an emergency or you have an unexpected circumstance.
- Start investing or a side hustle
- Retire or when retrenched
- Save for your children’s university fees.
How to save effectively
This is a debatable topic as people have different preferences and it’s not a one size fit all but l will share on what has been working for me:
- Doing stokvels – for this to work set goals on why you joining that stokvel group. What are your intentions on using the money after the end of the stokvel? If you can’t answer this, you will not see the benefit of saving.
- Having a fixed deposit account – this you can set up with your bank. Before you open one just go around comparing the interest rates. l mainly prefer the money market accounts as they have higher interest compared to the normal savings account.
- Saving a few dollars really does help – l do not buy any lunch at work. I prepare my breakfast and lunch at home. I save R50 every day and multiplying that by 20 days that is R1000 I would have saved and by the year-end it would be R12000.
When living from paycheck to paycheck there are few new habits one has to be committed to, like:
1) Payoff debt – pay off your high-interest debts first and then the low-interest debts, every month put a minimum payment of the debts. Once debts are cleared try not to borrow again and to no longer make use of credit cards, rather take advantage of the rewards cards.
2) Look for other channels to increase your income, any small business idea even if it gives you little profit. That will help in starting a savings journey.
Let’s plan for our future and work towards financial freedom for the generations to come. It starts with you and today is the best day to start.
Author: Talent T Manyonga