The vast majority of South Africans don’t save, even if it is in their best interest – and that of the economy – to do so. We’ve put together dozens of practical tips to help you put more change into your piggy bank – or your investment portfolio.
Whether one prefers to adopt a glass-half-full mentality, or is regularly accused of rampant pessimism, South Africans cannot reasonably argue against the fact that the country currently languishes in a state of national economic and political fragility. Consumer confidence has hit a six-year low, SA’s economy has officially entered a recession, and the ranks of the unemployed continue to swell.
In such volatile financial times it is always best to focus on that which can be controlled and, in this context, that happens to be our individual spending and saving habits. finweek has put together a collection of tips and tricks that should help to – amid disquieting economic volatility – make saving easier and unnecessary spending more difficult.
1. Understand compound interest.
As Albert Einstein once said: “Compound interest is the eighth wonder of the world. He who understands it, earns it... he who doesn’t, pays it.”
Compound interest takes into account not only the original loan (or savings) amount, but also accumulated interest of previous periods. (See table from Investopedia below.)
This shows how much money you can save by paying off loans quicker, and how much you can earn by starting to save as soon as possible.
2. Direct any excess cash into your bond or high-interest debt to pay it off quicker and reduce the interest bill.
3. Improve your credit score by paying bills on time, paying more than the minimum required amount, and reducing your overall debt levels.
A better credit score will allow you to benefit from lower interest rates. TransUnion (www.transunion.co.za) and other credit bureaus allow you to check your credit report for free once a year.
4. Switch bank accounts to take advantage of perks and earn more interest.
This story is from the 27 July 2017 edition of Finweek English.
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This story is from the 27 July 2017 edition of Finweek English.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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