10 Top money saving rules

Are you on your way to reaching your savings goals? Or do you never seem to be able to grow your assets? If you find saving money difficult, this guide provides you with the top 10 rules of saving.

1. Write a budget
Yes, write it. It’s important that you can see your budget laid out clearly in front of you. Often what we spend and what we imagine we spend are two very different things. Don’t just write out a monthly budget – take a look at your annual expenditure. Holidays, car services, bonuses, school fees – it’s rare that each month will be the same.
Without a clear budget, we often attempt to commit to unachievable savings goals and feel frustrated when we’re unable to reach them. Only once you’re fully aware of your income and expenditure will you be able to define how much you can save, and make realistic and achievable goals.

2. If you have debt – stop here
Look at your budget – are you spending more than you earn? Do you have any debts to pay off – whether it’s a loan account, a credit card or a shop account?
The golden rule of saving if you’re in debt is: don’t start saving. The interest you’ll pay on your debts usually exceeds the interest you’ll make on your savings. Pay your debts off first. Go to our simple debt guide for tips and advice on how to pay off your debts and get your finances back in order.

3. Trim back
Once you have your budget in front of you, take a careful look at the monthly or annual expenses you could cut back on. Perhaps it’s a gym membership you never use, a DSTV subscription you’re willing to let go of in order to save, or those meals out four nights a week. There are always ways to cut back if you have a savings goal you’re serious about.
For tips on how to trim those monthly outgoings in order to save, check out how to cut costs now.

4. Keep track of small spending
Small spending – those little amounts we waste away because, well, they’re barely noticeable, right? For 2 weeks, write down every small amount you spend each day, and then decide for yourself. It may seem like a time consuming and laborious task, but it’s the most effective way to become aware of your small spending habits, and how they might be affecting your budget.  R 20 on a coffee, R 7 on a chocolate, R 12 on a newspaper and R 15 on a pack of chewing gum – these small and seemingly harmless expenses can cash in at R 60 a day. Which is R 1,800 a month. Which is R 21,600 a year. Still feel so small to you?
Keep track of your small spending and commit to saving a portion of it each month.

5. Save on payday
Don’t tempt yourself – simply set up a monthly debit order into your savings account as soon as your salary clears. Make sure your savings account is linked to your current account, and that the monthly debit order is free.
Check out our savings account guide for a little insight into the savings products and services available.

6. Keep up to date
Banks are constantly launching new products. Keep up to date with the latest savings account offerings, and don’t be afraid to challenge your bank. Every year, take a look at what’s out there and what your savings account is doing for you. And if you feel it could be working harder, then make a change.

7. If you’ve got it, fix it
If you’ve got a lump sum, put it in a fixed deposit account. The interest is usually higher, and the fixed term means you’re less likely to withdraw and spend that money.

8. Invest
If you’ve got around five years before you need to withdraw your money, consider investing. Of course, investment comes with its own share of risk, but if the investment is long term you should be less affected by market volatility. Chances are you’ll see more of a return than if your lump sum was sitting in a standard savings account. Check out our tips for successful investing to get you started.

9. Set up a rainy day fund
The experts’ advice is to have six months’ salary saved in an account, which you can access without having to give notice. If this feels very far away to you, then aim for three months’ salary. Think of this as the rainy day fund – the money you’ll use if you’re in an accident or your car breaks down or you lose your job. Hopefully these things aren’t likely to happen…but if they do, you want to be prepared.
To get started with your savings, take a look at our guide 10 Steps to Sorting Out your Finances.

10. Save for your retirement
Experts estimate that you will need about 70 percent of your pre-retirement income to maintain your standard of living when you stop working. Make sure you contribute a percentage of your income to your retirement every month, and don’t touch this money. Consider your provident fund or your pension fund to be separate from your savings.
For advice on setting up your retirement plan, take a look at our pension fund guide.

Moneybags is all about finding the best ways to save. We believe that money can be saved no matter where it is being spent. If you want to keep up to date with our top deals, savings and money advice, stay tuned to our weekly newsletter.