The three-step savings challenge

South Africans, as a nation, are not good savers and we’re getting progressively worse. According to the South African Reserve Bank, South African households were saving at a rate of 4,2% in 1994. In 2013, the household savings was down to only 1,6%. Fortunately, says Sonja from Sanlam, there are steps you can take to beat the average.

 Pay yourself first

 You may intend to save what money is left after you 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 often gets put off.

 The secret, says Sonja, is to pay yourself first, before any expenses. Put money away for saving as soon as you receive your income. Ideally, set up a debit order that is deducted 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.

 Avoid the debt trap

 In a recessionary climate, the last thing you need is excessive unnecessary debt, defined as debt incurred to buy things you don’t really need, for example a flat-screen television and other luxuries. Try to avoid buying on credit as far as possible, says Sonja.

 With big purchases, such as a house or car, do the sums to check what the required repayment amount would become should interest rates go up. Remember, interest rates are cyclical and can fluctuate. You don’t want to be in a situation where you can’t afford the debt repayments if the interest rate goes up and you then run the risk of losing your home. Ideally, you should be able to absorb the repayment increases into your budget as and when they occur.

If interest rates do come down, you should use it as an opportunity to pay off more debt. As interest rates drop, the required debt repayment for your home or car loan, as well as other debt, will also drop. If you can manage it, pay the same amount into the loan as you were paying before the interest rate cut. In this way, you can pay off your loans more quickly.

 Put your goals on the clock

 Decide what is really important to you and what you need to be saving for – be it a house, your retirement, your child’s education or that much-needed holiday. Putting money away each month is much easier if you know exactly what you are saving for, how much you need to save and, most importantly, by when. If you don’t have an end goal, says Sonja, your immediate needs and wants will seem much more important and take preference.

 It is often advisable to meet with a financial expert who can help you prioritise your saving needs, work out how much you should be saving to reach your end goals and suggest the most suitable savings method.

 The variety of savings options available can be confusing. But because saving is so important, it is worth doing some research into the best savings vehicles for your needs.

 Short-term saving: Most banks have various products designed specifically for saving. These include notice deposits, call accounts and money-market accounts. You can start with a small monthly contribution and can access your money at short notice.

Long-term saving: The most 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 more difficult to access your savings.

 Enlist the services of a financial adviser to help you choose a savings vehicle that is most appropriate for your needs.


 Sanlam Life Insurance Limited is a licensed financial services provider and a registered credit provider.

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Sue St Leger

Owner of Sue St Leger & Associates
Sue St Leger & Associates

Sue St.Leger, owner of Sue St Leger & Associates, shares her personal tips and thoughts on the importance of women supporting other women in business, leadership and networking. As an experienced profiler and emotional intelligence assessor, she encourages fostering a supportive and empowering environment for women through self-development.

Mel Gard