How can you save money during a tough economic climate?
Amid the rise of the cost of living, several years of recession post the pandemic, and load-shedding, now is the time to gear up your saving strategy.
Inflation can have a huge impact on how we save money as well as how our investments perform.
It can reduce the value of your portfolio, but you can also find ways to use it to your advantage whereby your investment grows in line with inflation.
Everyone deserves financial security, so don’t be discouraged by the struggle to afford daily essentials and make regrettable financial decisions during this time.
You may be tempted to withdraw from your retirement but that could set you back on retiring comfortably.
Here are four tips on how to save some money:
1. Examine your spending habits
To be honest, no one really enjoys examining their spending habits but it’s an important task that can help us cut down our expenses to ensure financial security.
We encourage people to put their needs before their wants, so it’s essential to learn how to create a budget based on your earnings and expenses.
Experts often mention the 50/20/30 formula.
That means allocating:
- 50% of your budget for fixed expenses and,
- 30% for flexible costs, with
- 20% going towards saving.
If it’s hard to do it on your own, then check out 22seven.
It will help you by creating a personalised budget and keeping track of your money.
Lastly, practice the self-discipline needed to stick to your plan to succeed.
2. Start saving small amounts, to grow big
People often think that they need large amounts of money to start saving but that’s not true there are options available to you.
You can start investing for as little as R500 per month in an interest-bearing investment and watch your money grow.
3. Diversify your portfolio
Diversity is key.
The idea is to invest in enough different sectors of the economy so that if one investment does poorly, your other investments will make up the difference.
If you have too many of your eggs in one basket, you could end up increasing your risk.
A diversified portfolio spreads the risk evenly so that no single mistake will ruin everything.
Like the tax man trying to take some of your capital gains therefore to optimize your savings for tax efficiency South Africans should also consider a Tax Free Savings Account (TFSA), the most tax-efficient savings vehicle.
However, if you’re looking for a savings vehicle that allows you to be in control of your investment, one that is more flexible, and matches your affordability.
It’s worth looking into flexible investment plans that allow you to save as much as you want and for as long as you can.
To create a comprehensive savings plan, you should speak to an adviser.
4. Speak to a financial adviser
Speaking to an accredited financial adviser will help you safeguard your financial future.
Financial advisers are here to assist you with making sound financial decisions.
They’ll help you grow the little that you have or keep you informed about making sound financial decisions.
Financial advisers can help you set a budget and define your financial goals whilst helping you reach those goals.
They can also help you take advantage of low-income investments that you may not be aware of.
Loading ...