“Develop success from failures. Discouragement and failure are two of the surest stepping stones to success.”
~ Dale Carnegie
Low-income households in South Africa make up at least 54% of the population. More than half of South Africans fall into the low-income households with the main breadwinner earning in excess of R10 000 per month. With the current state of the economy, no one expects low-income families to be able to save money. However, they would be wrong.
Regardless of how bad your financial situation is, there is a solution. There is always a path to take to make it out of financial slumps. Here are 5 effective saving strategies for any budget.
1.Financial Knowledge is King of the Coin
Financial terms usually go over the top of many people’s heads. Two common reactions are to ignore the entire subject. Or they simply agree to what the ‘more financially capable person’ is saying. This creates a massive dilemma of entering into agreements which you do not understand and cannot fulfill.
Not understanding financial terms does not mean that you are stupid. Financial jargon, like any other area of life, is like a language which needs to be learned and understood. The quicker you learn the terms, understand what they mean and the implications they have, the better you will understand how to work with your own finances.
For example, do you understand what inflation is? Do you completely comprehend the details and the effect that it has on your finances? If not, here is a video to explain everything about inflation. Of course, inflation and interest rates go hand in hand. To understand more about interest rates and how you can save money when they rise, click here.
Learn everything that you can to increase your knowledge to implement what you learn you will increase your financial knowledge.
2. Changing Financial Habits is Like Dieting
Everyone has failed going on a diet at one time or another. Why? Because most diets require you to instantly cut off almost everything that you are used to eating. When you do this, you send your body and mind into shock. Your cravings for the old habits become stronger and stronger. Unless you have an iron willpower, you are bound to fail.
Changing your financial habits is a must. If you are in a position where finances are troubling, then your money habits are not working. Change is the secret in the sauce.
Do not cut off old financial habits and go cold turkey. This will only send you into a state of shock and you will return to these habits. Instead, make small changes.
Changes which you can handle. Teach yourself to become used to saving money, buying better and working with your money on a smaller scale. A habit takes approximately a year to form, but any activity becomes automatic after only 66 days.
3. One Luxury Turned into Savings
We all have luxuries which are purchased on or after payday. Even that chocolate bar can be seen as a good enough luxury. Instead of buying the item, put the money away into a savings account.
The average chocolate bar costs just under R20 now. By getting into the habit of saving this money and seeing it grow over time by simply reducing your luxuries.
4. Lowering Your Costs
When you have a smaller budget with no money left over to save, you need to the money that you do have, work harder for you. The easiest way to accomplish this, is by lowering your costs. This can mean anything from:
- Choosing cheaper brands of food
- Changing the type of food you eat and how you prepare meals
- Walking more, driving less and planning trips
- Replace phone time with activities like reading to save on data costs
- Keep unnecessary social outings to a minimum
- Start paying off accounts and closing them
Every cent you saved by lowering your costs, place into your savings account.
5. Before Anything Else, Save First
The greatest gift you can give yourself, is a growing savings account. Save an amount of your salary every month. Before you do anything else with your money.
It may sound like saving money is boring and tough. Especially for those with a smaller budget who must cut down on costs as much as possible to make money for saving. But once you see your investment grow, it will feel worth the effort.
It is known that there is always a storm before the most beautiful clear skies. If you can save money and live frugally for a while until your finances are in order, you will find yourself with a bright financial future.
For the last 12 years, Debt Rescue has been at the frontlines assisting over-indebted South Africans. Debt Rescue has managed to help thousands of consumers achieve financial freedom through the debt review process. Contact us now to see how you too can manage your debt affordably.