You’ve put it off for long enough – it’s time to start saving. Yes, it was great being able to spend your hard-earned cash on the things you wanted. Whether it was clothing, gadgets or just the ability to blow a good chunk of your salary on dinner and drinks, perhaps its time to reconfigure that budget.
Life may be good now, living lavishly and spending – but one thing about life? It also moves quickly. As young people, we’ve all heard our older family members or work colleagues speak about how quickly time flies – we also hear them speak about the importance of saving from a young age. They’re right, it’s one of the most important things you need to start doing.
Before we start off, the important thing you need to do (for successful saving) is to change your attitude towards it. Saving isn’t like paying a bill or a monthly fee – you’re paying yourself – rewarding yourself, in fact – but for a later stage? Retirement and family planning may be a long way away for you, but as time creeps up, you want to be as financially prepared as possible.
Another thing I’d like to put out there before carrying on – it’s not always easy to save. As we’re well aware, many young people in South Africa have to support multiple family members, often on an income inadequate for the task at hand. Other young people are paying off student loans and therefore cannot afford to save. But even if it’s just a couple of hundred rands a month, you’re making a start.
With that being said, let’s look at ways you can start saving for your future.
I was always taught, from a relatively young age, that saving is different from investing. Both are very important parts of your personal finance journey – but play very different roles. I’ve written numerous times on emergency savings and how important they are. You never know where life may take you and having a financial cushion to soften the blow will help you in many ways. When saving money, it’s best that you stash that cash in a low-risk platform (like a generic bank account, for example) where it is easily accessed if need be.
Investing, however, is more of a long-term approach to your future goals. Traditionally, most people invest in property and the stock market. While these investments may fluctuate in value, there’s a high chance that they return an acceptable profit over time. This will help you in the case of retiring, for example.
How much should you have saved? Well, that differs from person to person. With regards to your emergency saving fund, experts say that you should have at least three to six months worth of expenses saved away. Once you reach that benchmark, that doesn’t mean you should stop saving. Continue to contribute to your emergency savings fund for as long as you can. When talking about general saving, it’s best to first budget – what are your monthly expenses? It’s no good saving a great chunk of your salary and then battling to survive until pay day comes around. See what you can afford – many aim to put away 10% of their salary, dedicating that amount to their future and nothing else.
You may look at your monthly budget and see no more room for saving. But with a little reshuffling, you can make space. Saving does come with an element of sacrifice – perhaps cutting your expensive coffee habit down or going out less? Ask anyone who saves religiously, cuts need to be made to ensure a better future for yourself.
But you have debt you say – shouldn’t you pay that off first? Well, yes – but that doesn’t mean you shouldn’t save, either. Start with your biggest debt first and make it a goal to pay it completely. While you’re doing that, try to save a little bit of money on the side – you don’t want something unexpected to happen, forcing you to use that credit card all over again.
As long as you make a start, big or small, you’re on the right path. If you’re not sure where to begin, speak to someone who has got more knowledge on the subject – such as a financial advisor (0r even a parent). Often times, they have invaluable insights into the financial world that can help you save with gusto.
Have a question about share investing? Write to me atĀ [email protected].
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