Behavioural scientists have found that we feel loss far more greatly than gain which is why asking us to cut-back on our lifestyle makes us very unhappy. We feel the sacrifice immediately but only reap the benefits in the future. While it may be a tough ask to find extra money to save in your current budget, there are smart ways to save without noticing.
Bank your change:
Remember the piggy bank form your childhood?
You would be surprised how fast those coins add up. Every day empty your wallet of any coins and put it in a jar. If you do this all year, by December you will have that little bit of extra money to spend over the festive season or on holiday. Some banks now offer a ‘save when you spend’ option that allocates money from your current account into your savings account every time you spend. This is an effortless and invisible way to save.
Downsize your coffee
Remember the days when you went to buy a coffee and it only came in one-sized cup? Now most coffee-shop chains offer you a choice of small, medium and large.
This is really aimed at getting us to spend more as people are more likely to purchase a medium sized cup. The small cup is 250ml which is the amount of coffee we used to be happy with – so select the small version of your daily coffee purchase and save R3 to R5 – those rands add up over time. You may find many small ways to save money, but they add up over the month.
Set up a debit order
Remember the only way to really start investing is when we turn those day-to-day savings into real investments. Work out how much you are saving and set up a debit order into an investment for as little R250 per month into a tax-free savings account. Make sure the money goes off on payday. You will quickly adjust your monthly spend and over time that R250 a month will grow into something substantial. When you set up the debit order include a 10% annual escalation. Your savings will increase each year without you having to do anything at all.
Commit your future salary
When you receive your annual bonus or 13th cheque, ask your employer to contribute 27.5% to the company retirement fund, tax-free. That way the bonus is paid out after investing, so it won’t feel so much of a sacrifice. At your next annual salary increase ask HR or your financial adviser to increase the percentage of your salary that you pay towards a retirement fund so a portion of your increase will go to boosting your retirement savings.
And finally work those loyalty rewards:
Most banks and some major retailers offer reward programmes. Keep those rewards, especially those that convert to cash or vouchers, to supplement the festive season spend.
While some of those might sound silly or simplistic – when it comes to saving.. every little bit counts – and believe me – you’ll thank yourself later if you can make those small sacrifices now.
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