Have You Fallen into The No Savings Trap?

If you don’t save you could end up over indebted, living paycheck to paycheck. Are you always just one emergency expense away from being completely wiped out? Find out if you’ve fallen into the no savings trap…

You’ve started hearing strange noises coming from the kitchen. You quickly realise that you’re not actually living in a haunted house. The strange noises are coming from the fridge. It sounds like it’s on its last legs. But you’re not sure. You decide to ignore it and you convince yourself that it’s probably nothing serious. Life goes on, and then… the “unexpected”- or expected happens. The fridge stops working and now you’re in trouble.

Sure, you could live without a fridge and save for the next 6 months. Or you’ll head to Game with your store card and get a new fridge. You’ll rather have a fridge now and pay it off (with interest) in 6 months. It’s a better option than living without one and saving for 6 months.  And to be honest, no one would blame you. No one is going to cry over sour spilled milk…

The unfortunate thing about not having savings, is that it comes with a price. And that price is debt. When we’ve not saved and things go wrong, we resort to credit. And paying off credit eats all our extra monthly cash, stopping us from growing our money.

Stash your cash in an emergency fund

The funny irony we all seem to live by:

Once we get into this vicious cycle, its petty hard to get out of. We only have so much money. So how do we get out of it so we can’t start adding to an emergency fund?

Getting out of debt can be tricky. And usually it’s tricky because it takes self-control. We all suffer with self-control from time to time. That chocolate bar always looks better when we are on a diet. And getting yourself to bed at a set time every night can be painstakingly difficult when you binge on a good series every night. Money is no different. It can be hard telling yourself you can’t get that cold drink from the Engen or that you can’t buy your usually takeaway on a Sunday night, when money is tight.

But sometimes we need to make sacrifices so that we can get to better place financially.

Living paycheck to paycheck means we are living without savings. And if you don’t have savings you probably have debt.

It’s time to change the way you see money and how you spend it. Yes, you have debt. But can you pay it off quickly so that you can start building your emergency fund?

Making smart purchasing decisions is difficult. If you do have that self-control, we tip our hats off to you. It’s easy to convince ourselves that we need something. You could cut down on spending by simply asking yourself if you really need it.

How much you should save?

Ask yourself a few questions. What emergencies do you need to save for? And how much can you put away each month?

Your emergency fund should also cover the following unexpected expenses:

• Job loss
• Car repairs
• Home repairs
• Medical emergencies

Your emergency savings should amount to 4 months’ salary. That means, if you get paid R12 000 per month, your emergency fund should be worth R48 000.

And when you need to dip into it, work at topping it up again.

Save money and money will save you

When the going gets tough the tough gets going. That’s why saving must become a priority and not just something we do when we have the extra cash. Pay yourself first and you will reap the rewards.

If you feel you cannot save because your debt repayments exceed your income, you need to act. Don’t continue to suffer. Get in touch with Debt Rescue and lower your monthly repayments. Take a break from using credit. Get your life back and take control.