Saving’s a matter of changing habits

2010-07-24 11:56

One of the major concerns South Africa is faced with today is a low

savings, if not a non-existent, culture of saving.

But again, what is saving?

An achievement for every income- earning individual is to be debt

free. Being debt-free entails acceptance of your means, living within your

budget and planning in accordance with your available resources.

I won’t go into the reasons why South Africans are simultaneously

grappling with a low savings culture and high debt levels.

With its diverse cultures, South Africa poses quite a challenge if

one was to try to rationalise the primary causes of debt levels.

What I know to be true is that some people tend to be reckless and

adventurous with their earnings.

In particular, the black majority had to go

through the euphoria of the new-found “freedom”, taste the previously disallowed

rights and access to services, and experience the so-called white

lifestyle.

Unfortunately, as we went into the experience without the knowledge

or financial literacy, many were duped into going overboard and incurred

unserviceable debt.

We spent all our earnings and still managed to stretch lifestyles

through unlimited credit facilities. Now it is payback time.

Unfortunately that period was the beginning of a culture of

financial daredevilry where future income was spent without care.

Somehow we

thought we wouldn’t have to account, and in the process some of us forgot that

South Africa has systems, infrastructure and laws that eventually call

individuals to book.

Financial experts repeat the saying that paying off debt is primary

and I agree.

However, we cannot do this at the expense of saving.

Our financial habits are our downfall, therefore this requires that

we change our daily actions so that we begin to save.

Money saving starts with

spending less of your income; less expenditure translates into better liquidity.

The less you spend the more money there will be to save or invest and pay off

debts.

We all have areas in our lives that could do with a bit of

adjustment.

One of those is cutting down on entertainment. Indeed, there are

individuals who can justify and get tax benefits on this.
 
However, it is usually

the little things – telephone bills, water and electricity, and many others – in

life that offer flexibility.

The other critical area of expenditure is groceries.

We often hear

that South Africans are obese, so why not start here? Rather than four meals per

day, have two. And now to my favourite topic of them all, drinking.

These days it has become fashionable to have “after tears parties”

where people really try to outdo each other on expensive drinks.

I know many claim to be social drinkers, but the main purpose is to

get drunk, so if a cheaper whisky can get you the desired effects why spend R300

rather than R60 for the same kick?

The other big expense is takeaway food.

Most of the takeaway food

stores charge about R8 to R9.40 for a 500ml soft drink whereas the supermarket

next door charges R6 for the bottle.

Like I said, it is the little things that we need to change but the

savings are great over the long term.

Unless we change our spending habits and

focus on priorities, there is no way we will be in a position to have money for

saving or investing.

» Diale is a financial planner. He can be contacted on 078?775?0802



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