Saving Tips from Old Mutual

SAVINGS TIPS

Below are some practical tips on what you can do to start saving.

MAKE SAVINGS A PRIORITY

Your goal should be to save at least 10% of your pre-tax earnings. Consider paying yourself first by starting a regular savings plan that could form the backbone of a fund from which you will be able to draw money to cover the necessities of life.

Whether you are saving for a major purchase or for your retirement, you will never reach your goals unless you make savings a priority. Little changes can add up to big savings on expenses. Those savings can be put to good use for achieving your long term savings goals.

Are you a spender or a saver? Be honest with yourself and select investments that will provide you with the discipline you may need.

MAKE SAVINGS FUN

Turn savings into a game. Instead of force feeding budgeting tips to yourself, look at this as an adventure. Try to top your own savings each month or compete with a friend. Make savings a family affair – have a fun programme of savings for everyone to enjoy.

Consider having a kitchen jar to save money for a family holiday. You might want to give yourself pocket money allowance. The key is that your spending should not exceed your allowance. After the money is gone, its gone.

GETTING STARTED WITH A SAVINGS PLAN

Don’t neglect tomorrow due to extravagance today. If you need to start savings, start TODAY! Procrastination is enemy no 1.

Invest when the market is low, its sale time! Its important to invest for the long haul and be prepared to ride out the highs and lows.

It may help to draw up your bucket list and separate it into short, medium and long term goals. This will play a large part in selecting appropriate savings vehicles to achieve these goals.

CREATE A BUDGET

A great way to help save money is to create a budget, and then stick to it. Even by just tracking where the money is going, you will be more aware of your spending habits and eliminate unnecessary spending. One of the best ways to save money is to never see it. Set up direct debits and designate that some of your money goes directly into a savings account.

Keep a money jar that you can throw all your change into each night is a great way to save money. Plus, if you keep a note of how much you spend, you will be able to calculate how much your day-to-day living is costing you.

Avoid temptations such as special offers popping into your mailbox daily, unless it’s something you have been looking out for specifically.

BUDGET TOOL

SAVING FOR RETIREMENT

Retirement should not be regarded as a point in time but rather as a period over which transition is made from living off earnings to living off savings. When you cannot work in old age, your money will be working for you.

You must start early enough, and you must save enough. If you leave off starting to save for retirement from 30 years before to 10 years before, you will have to put away 10 times as much each month.

Take retirement savings seriously and do more than your parents and grandparents did.

RETIREMENT CALCULATOR

SAVING FOR EDUCATION

Savings funds can be set up long before it is known exactly where they will be needed. Save a bonus in an RA and each year after that top it up by the amount saved in tax from the previous year plus the amount by which the bonus for the current year exceeds the bonus from the previous year. Double up on money saved by your children to encourage them to develop a savings habit.

EDUCATION CALCULATOR

SAVE ON BANKING & INSURANCE

Reduce your banking costs

• Eliminate unnecessary fees.
• Avoid ATMs outside your network.
• Check with you bank to make sure you have the best type of account for your needs.
• Sign up for automatic bill paying to avoid late fees and tarnished credit.
• Move it out of sight. Getting money immediately withdrawn from you paycheck and put into savings is a great way to create a nice little nest egg.

Monitor your mortgage

Keeping on top of your mortgage situation can help you save big.

Review your Car Insurance each year

Always keep up to date on your car insurance – remember each year the value of your car will decrease so remember to amend the retail/ market value on your insurance to ensure you are paying the right premiums for your car insurance.

Regularly update your home and contents insurance

You don’t need to insure your house with your lender. Rather, shop around to find the best home building insurance deal you can get. Plus, update your household inventory for insurance purposes. Check on replacement costs and grade your household goods correctly to ensure you are not over insuring your household items.

Consider your health insurance options

Your health will directly impact the cost of life insurance and in some cases can reduce your health insurance and unforeseen or budgeted for bills if you get ill.

REDUCE HOUSEHOLD EXPENSES

Food shopping tips

• Stop buying processed food at the supermarket and make food from scratch. Go fresh food – pre-packaged food generally costs more and are not good for you.
• Buy only what you need in perishables – how many of us root through our veggie draw to find mouldy lettuce?
• Buy in bulk – single packs often cost nearly as much as multi-packs.
• Buy family pack items these often work out cheaper than smaller packages and can be divided and frozen for later use.
• Don’t let your eyes be bigger than your tummy. Buy only what you need for the week and avoid stocking up with food which could spoil quickly. If you run out of food mid-week its no big deal to make a second trip to the supermarket.
• Cook at home and bring your leftovers for lunch. Get into the habit of rustling up your own food and you can easily pocket half of that cash, using the other half to bulk buy your groceries at the supermarket.
• Plan your meals and take a list when shopping.

A guide to smart shopping

• Downgrade your brand purchases. Going for the cheapest is a bit over the top but how about dropping a brand level on everything you can and the overall price drops by roughly 30%. Often you are only paying for the branded packaging anyway.
• Give alternative gifts and remember, “it’s the thought that counts” – put that to the test by offering alternative gifts. Home make your presents, offer a service, - they’ll love your thoughtfulness and you get to pocket the cash you would have otherwise spent.
• Compare prices – shop around for the best prices.
• Familiarize yourself with seasonal sales. But, forbid yourself from buying things simply because they on sale. Regardless of bargain prices an extra expense is just that – yet another drain on your resources.
• Be a smart shopper by buying quality when it counts.
• Delay gratification – giving yourself more time to think about a purchase means you’ll make a more informed, less impetuous decision.
• Always shop with a list – it keeps you focused on what you really need.
• Discount shopping - some products are cheaper at certain times of the year. Follow the shops' sales cycles and use this to your advantage and build a shopping calendar.

Save on your electricity bill

• Electricity is a problem in South Africa and the cost keep soaring, so you have to do what you can to keep your electricity bill down.
• Switch off the TV when no one is watching.
• Turn off the lights when you are not using them.
• Buy energy efficient products/appliances (this also saves the environment).
• Unplug unused appliances – only have chargers plugged in when you are charging things.
• Wash your clothes in cold water, and limit the use of a tumble-dryer.

Reduce household expenses

• Maintain your home – taking good care of your house can save you lots of money.
• Watch less TV. Do you really need 300 channels? Going down a tier in your DSTV service can save you some cash too.
• Cell phone - change your cell phone package to suit your real needs.

CAR EXPENSES

Keep your tyres properly inflated – you’ll prolong their life as well as save on petrol. Regular maintenance of your car – like your home – will ensure it lasts longer. Make it part of your routine to check the car's oil, water and tyre pressure regularly. Live closer to work. It's better to pay more for the house, an appreciating asset, rather than on petrol and maintenance on the car.