NEGATIVE SAVINGS
Star JohannesburgWith barely 0,4 percent of domestic disposable income being saved, negative savings is the predominant feature of most families’ monthly budget.
The Chairman of the South African Savings Institute, Andrew Bradley, offers some helpful savings tips:
- Don’t incur debt, but if you do, make sure it’s not on depreciating assets
- Reduce debt, or consolidate all your debts into the one paying the lowest rate of interest.
- When consolidating your debt, ensure you continue to pay the gross repayments. The biggest danger is that you consolidate all your debts into a 20-year mortgage plan and end up repaying a four-year car loan over 20 years.
- Pay off the debt with the highest rate of interest first – then pay off all your debt in the shortest time possible.
- Budget to save – each month allocate a portion of your salary to savings.
- Ensure your savings plan accommodates your short-, medium- and long-term objectives – don’t invest short-term money in long-term investment vehicles.
- Adopt a long-term approach to your savings plan – do not react to market volatility, which is short-term in nature.
- Cut interest-rate costs by shopping around for the cheapest rates.
- No amount is too little to save – even R20 a month will grow to R20 000 over 20 years through he magic of compounding.
- Instead of gambling, save that money. The chances of becoming a millionaire are greater through saving than buying lottery tickets.
- Cut out unhealthy habits such as smoking and instead invest that money in a savings plan.
- Almost any book on getting rich will emphasize two points, firstly, spend less than you earn and secondly, take the first, not the last, 10 percent of your income as an expense towards your savings.
