Overcome those financial obstacles

The importance of saving is in the spotlight as South Africa’s household savings rate is lagging far behind our international counterparts, which is impacting our economic growth. While we may have good intentions to save, our salary comes and goes and often not a cent is spared for savings.

Obstacle 1: Nothing left to save after expenses

You may intend to save what money is left after your have paid all your monthly expenses (including the extra expenses that crop up), but the problem is there never seems to be any money left over to save. So saving gets put off for a more financially convenient time.

Overcome: The secret is to pay yourself first, before any expenses. Put money away for savings as soon as you receive your income. Ideally set up a debit order that gets taken off and paid into a savings account or savings plan. It might mean reducing your spending money to cover your expenses but it will be worth the peace of mind knowing that you are essentially saving towards a better quality of life. 

Obstacle 2: Don’t want to downscale your lifestyle

The many social invitations you simply can’t turn down, your ‘much-needed’ daily latte and your monthly visit to the hairdresser are some of the seemingly important luxuries that you can’t do without…or won’t do without.  

Overcome: If you are serious about saving, track your spending to see exactly where your money is going each month. Distinguish between your needs and wants and be cautious of luxuries disguised as necessities. By giving up that R20 daily latte you could save R600 per month - that is an annual saving of R7 200. Sacrificing that daily coffee could afford you a luxury holiday at the end of the year.

Obstacle 3: Don’t have a savings goal

Putting some money away each month is much easier if you know exactly what you are saving for, how much you need to save and by when. If you don’t have an end goal, your immediate needs and wants will seem much more important and take preference.

Overcome: Decide what is really important to you and what you need to be saving for, whether it be for a house, your retirement or that much needed holiday. It is often easier to meet with a financial expert who can help you to prioritise your saving needs, work out how much you should be saving to reach your end goals and suggest the most suitable savings method.

Obstacle 4: Confused about the best savings method

The variety of savings options available can get confusing and so some people tend to avoid them completely. But because saving is so important, it is worth doing some research into the best savings vehicles for you needs.

Short-term saving: Most banks have various products designed specifically for saving.  These include fixed deposits, call accounts and money market accounts. You can start with a small monthly contribution and they allow you to access your money by giving a short notice period.

Long-term saving: The more common investment vehicles include endowment policies, retirement annuities and collective investment schemes (unit trusts). With these vehicles you earn higher interest and they are good for disciplined saving as it is harder to access your savings.

Overcome: Do your own independent research to get a good understanding of what is available or meet with a financial expert who can advise you on which saving route is best for you.

Armed with the knowledge to identify and overcome your savings obstacles, start saving now! It might entail some sacrifice, but it will allow you to afford the bigger more important things and result in a better quality of life. The earlier you start saving the more your money can work and grow for you.

Sanlam Life Insurance Limited is a licensed Financial Services Provider.

How do you overcome your financial obstacles?