July marks National Savings Month and, according to a survey conducted by Budget Insurance, Generation Z (18 to 24 years old) are the most serious about savings.
GenZ is the group of people born after the Millennials who are entering their early adult years and starting their young careers. One of the key differences in financial habits between these two generations is, Millennials tend to focus on having experiences whereas GenZ is interested in saving money, according to the World Economic Forum.
“The research indicates that while saving is important for most South Africans, having a disposable income plays a big role in the consistency of their saving habits. 49% said they save, but usually end up spending their savings, 43% only save when they want to buy something ‘big’ and 42% of the participants said that they used to save but can no longer afford to do so,” says Susan Steward from Budget Insurance.
Those who are saving do so through a monthly deposit and most South Africans prefer burial societies, at 96%. This is closely followed by investment policies with financial institutions at 91% and then stokvels or rotating savings clubs at 88%.
To assist with saving money, the majority of South Africans create a monthly budget and tend to stick to it, especially those earning R10 000 or more.
“Of those earning R10 000 or more, 41% said they ensure their finances are well managed but agree that increases in food prices are the biggest threat to their budgets, followed by unexpected expenses and fuel costs. To counter this, 51% say they are saving for a rainy day or emergencies and many would sacrifice their luxuries, such as eating out, going on holidays or purchasing new clothes, in order to save,” notes Steward.
According to Gerald Mwandiambira, acting CEO of the South African Savings Institute (SASI): “Saving when you’re already under financial pressure can often seem like an impossible task. That said, it’s vital to ensure your stability and happiness. Saving is not necessarily dependent on income but rather, on willpower and discipline.”
Budget Insurance and the SASI offers the following advice for saving money:
- The first step is to draw up a budget. List your fixed expenditures and other monthly deductions and then tally these up against your income. If your expenses are more than your income, then you need to begin planning how you are going to reduce them. If you do have some money left over every month but believe you should be saving more, draw up a budget to stick to and gain control of your expenditure.
- Some areas are easier to trim down on so concentrate on them first. Remember, even the smallest adjustments can make a meaningful difference over the long term.
- Once you have trimmed-down your expenses, you can start channelling the extra money you have into paying off your debt faster, starting with those with the highest interest rates first.
- Make sure your budget has a goal, whether it’s to pay off your credit card debt or save money for a family holiday. Working towards a goal provides direction, makes it more fun and, delivers a sense of accomplishment when the goal is finally achieved.
- Be realistic. If you set too lofty a goal and reaching it means deprivation on all fronts, the likelihood of you sticking to your budget is minimal.
- Be honest about your debt obligations and your expenses so that you have a clear and realistic picture of your financial situation. Communicate this with everyone in the family so that they understand the limitations within which they must live. This will also prevent any feelings of resentment when they are refused money for something they want to do or buy.
- Deliver on your promises and offer rewards. If the goal was to save enough money to go on a holiday, then you must deliver on your promise when that goal is reached.
These are some of the possible areas where you can start cutting excess fat from your budget:
- Cellphone: If you know that you can and should be spending less on your cellphone bill, then consider switching service providers or swap to a package that is more appropriate to your usage requirements.
- Entertainment: If you are the type of person who enjoys regular nights on the town, consider cutting down the amount of times per month you go out by half or set yourself a limit in terms of what you can actually afford to spend on entertainment and once that is gone, stay at home.
- Dining out: If it’s become a habit to buy lunch at the corner deli or office canteen every day, think about rather packing a lunch to take to work.
- Groceries: If you’re popping into a convenience store on your way home from work to buy bits and pieces for dinner, it is costing you more than if you made a proper shopping list and shopped wisely at a supermarket once or twice a month.
- Bond: Interest rates are on the rise and if your bond instalment has become unmanageable as a result, shop around and see if you can lower your monthly repayments by refinancing your home at a more favourable interest rate.
- Credit cards: Abusing the credit facility on your credit card is dangerous because it can land you in serious debt. It is also more expensive in the long run because interest charges are usually high. Keep your credit card for emergencies only and make the decision to pay for goods and services with cash or debit card only.
- Insurance: By shopping around for the best insurance premium you may be surprised at how much you can save.
“Remember that even the smallest adjustments in a number of areas of your budget can add up to significant savings. The small changes and sacrifices you make now will be worth it in the long-run,” says Steward.
The post This Is How South Africans Save, With Gen-Z Leading The Pack appeared first on iAfrica.com.