Did you know that most South Africans save only two cents for every R100 earned? Unfortunately many of us are so busy working all day trying to side-step the recession and make ends meet, that the concept of saving — whether it’s for a new winter coat, deposit on your first home, retirement or for unexpected emergencies like car repairs or a hospital visit — is often left until it’s too late. However, even if you’ve turned to credit to help you out of financial situations before, it’s never too late to change your behaviour by starting to save.

To help get you into the habit of putting something away for that rainy day, Carl Fischer, Executive: Marketing and Corporate Affairs at Capitec Bank provides some easy tips:

The value of a budget

"The starting point for any financial plan is to draw up a budget. This will teach you about your spending habits and guide your spending in a responsible way," says Fischer. "For example, it will help ensure that important payments such as rent and loan repayments are paid before you consider spending on luxury items."

Getting started: Drawing up a budget

To put your savings plan into action, you’ll need to identify your current spending patterns. And, the best way to get an accurate reading of your monthly expenditure is to analyse it over three months. By having an idea of your monthly disposable income, you’ll also be able to plan ahead.

To get started, try these tips:

1. Start a finance file where you can store your receipts and bank statements.

2. Add up your monthly income (salary, overtime payments, etc.).

3. Add up your necessary monthly expenses (rent or bond, car instalments, policies, school fees, groceries, clothing, petrol, medical bills, telephone, cell phone, water and electricity, bank charges, entertainment, etc.).

4. Add up your annual expenses (TV licence, car registration fees, etc.).

5. Deduct your expenses from your income.

From the outcome you will see whether you are in a position to start saving or whether you have a shortfall and need to cut back on your expenses.

Making up for shortfalls

Take another look at your budget and find areas where you can reduce spending. "Be sure to differentiate between wants and needs and don’t damage your credit record by avoiding your payments as this will have a negative impact in the long term," says Fischer.

Some obvious ways to save would be to avoid banks that charge exorbitant fees and to cut back on spending, especially on luxuries such as eating out, beauty treatments and new clothes.

You could consider looking for opportunities to earn extra income or asking the shop, bank or credit provider to reschedule your debt and pay off smaller amounts over a longer period of time.

Pay debts first

This is one of the easiest ways to save money as you will kill two birds with one stone: pay off your debt and settle the interest.

"If you have a personal loan, store account or overdraft, pay them off first. Also bear in mind, the more you repay and the quicker you can settle the debt, the less interest you will pay. This will free up your money and improve your cash flow, allowing you to start saving," advises Fischer.

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