We know that you can’t skimp on car and house repayments, school fees, credit repayments and groceries, but you can cut down on needless spending…
‘Fast food habit runs don’t threaten our finances, but the effect of bad spending habits can be the difference between being rich and poor,’ says Nolene Parboo, head of savings and investments at Standard Bank.
Here are Nolene’s 10 suggestions to help you shake up your spending habits – and still have money left at the end of the month!
- The morning coffee run can cost as much as R25 a day. That’s R750 a month, or R9 000 a year. If you invested R750 per month for 5 years at a 7% return, you would accumulate R53 000 in savings.
- You may be coping with your clothing account payments, but the interest payments are high. Consider cutting down on some of your retail accounts.
- It’s important to save for retirement, but do you keep finding things in your budget that need more attention, like DStv and your golf membership? You could easily be spending over R1 000 a month on luxury services you don’t need. Decide what’s really important and what you can do without.
- Never go shopping without a shopping list. And stick to it! Don’t put anything in the trolley that’s not on the list, and you’ll save.
- Try implementing the 50/30/20 rule. From your after-tax salary, allocate 50% to essentials (housing, transport, utilities and groceries); 30% to financial planning (retirement, savings, risk cover and debt) and 20% to lifestyle (travel and entertainment). If you’re over-indebted, the lifestyle allocation needs to be smaller.
- Sometimes the decision not to spend on risk management tools such as medical aid and insurance can put you under financial strain in the long term. No luxury purchase is worth having to face a big medical bill.
- Avoid buying a new cellphone, laptop or tablet every year, and don’t fall into the trap of having five contracts; just the add-on fees alone will cost you.
- Pay yourself first. Don’t spend your entire salary before you have put some money aside for savings.
- Try to change the habits you get into with friends: opt for stay-at-home get-togethers and bring and braais rather than going out for dinner or pricey activities.
- Teach your child the value of money by paying pocket money for chores. This way they can learn to save to buy the toys they want.