How to spend less, and save more

2016-04-06 06:00

IN the current economic climate, saving seems impossible and most of us live from payday to another payday. But there are places where you can cut spending - and even save a bit - it's all about taking responsibility for your spending.

Start by reviewing your bank statements (at least the last three months are recommended) and categorise each transaction. A programme like Excel is an excellent tool. This exercise will allow you not only to understand debits and credits, but will also help you to see where you are actually spending your money.

Review your debit orders - explore transferring these to the first of each month which will allow you to determine what is available for the rest of month.

If you are insured, shop around for cheaper insurance. Maybe look at consolidating your debt (mortgages, cars and loans) – it is often cheaper to pay one debtor as opposed to many.

Only once you have a complete understanding of your spending habits can you make changes to them.

Now that you understand your spending habits, it is time to determine your essential weekly cash requirements. I recommend you open a separate secondary transactional account, which is automatically credited weekly with a sum that meets these needs.

Once you have done this, play a game with yourself by trying to reduce your weekly outlay. This will ultimately help you establish new spending habits. As time goes by, you will see the balance in your primary account grow.

Albert Einstein once said: “Compound interest is the eighth wonder of the world. He who understands it, earns it - he who doesn't … pays it.”
- Danie Venter, Advisory
Partner, Citadel.

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