Hey, Big Spender

Those who have a little (or a lot) of expendable income know the basics of budgeting - don't spend more than you earn. So why do so many of us still do it? Karin Schimke looks into the psychology of saving.

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Employed people generally know they have to save money — for old age, for emergencies, for big dreams — but they don’t. ‘It seems to be human nature,’ says Netto Invest financial planner Jennifer Nedzamba. ‘Knowing something is good for us is not enough to get us to do it.’

South African consumers are notoriously good at accumulating debt and bad at saving money. This is despite an instinctive understanding that, while money can’t buy love or happiness, it can certainly give you peace of mind. ‘As with maintaining a healthy body, most people know the best practices or basics,’ says personal leadership coach Roland Cox, ‘but the learned behaviours we have mean we’re driven by deeply personal motivations for spending rather than saving. These have many different forms but arguably rest on the fundamentals of fear, anger or shame around money.’

The main barrier to saving seems to be simply the rationalisations we provide for not doing so. ‘I can’t afford to save’ is a classic rationalisation, says Cox.

THINK YOU DON’T HAVE ENOUGH TO SAVE?

Not saving because you think you don’t have the money to is an excuse. ‘Saving is a decision, then a habit,’ says Cox. ‘It doesn’t matter how small the amount that you receive is, as long as you put a percentage of it away. And then repeat this regularly so that it’s not noticeable on a monthly basis, but effective in the long run.’