It’s important to put some of your salary aside so that you have money for unforeseen expenses.
Savings Month, commemorated annually in July, is even more important this year due to the financial hardship many people are facing because of the Coronavirus Disease.
When the pandemic started in South Africa, many people could not go to work due the national lockdown.
While some people still received their salary or were able to claim from the Unemployment Insurance Fund, others had no income and had to rely on their savings.
Financial literacy socialite and author Nicolette Mashile encourages people to set up an emergency fund so that they have some money available during hard times.
“An emergency account stops you from taking out any unplanned and usually very expensive credit.
“Generally, you need money for extra things, like home repairs, and end up taking expensive credit because you didn’t plan or save for them,” she says.
It is up to individuals to decide how much to keep in their emergency fund. Mashile adds that it is important not to spend any of that money unless it’s an emergency.
The South African Savings Institute (SASI) provides the following tips on how to boost your savings:
- Have a clear budget for your needs every month. Create a budget using the free SASI budget tool or phone apps.
- Use free online tools to track your spending and debt and know where every cent of your money goes.
- Pay cash and do not become trapped by easy credit.
- Visualise what you want to save for and start saving more.
- Service your debt and stick to the payment terms. If you cannot pay your monthly debts discuss your situation with your credit providers before it is too late.
To encourage South Africans to save, government introduced a tax-free savings account in 2015.
You can ask your bank to open one for you. You will not pay any tax on the money in the account, but can only contribute a maximum of R36 000 per tax year and R500 000 in your lifetime.
To learn more about saving, visit: www.savingsinstitute.co.za