How to save without much money to spare?

There are no hacks to grow your money magically, but some tips and advice might make it easier to achieve your savings goals. As we point out in our Consumer Education Handbook, money gives you access to services and products, expands your range of choices and opportunities, and can improve your sense of security and peace of mind.

Financial health affects your physical, mental and social well-being. Being able to secure enough finances and resources to support your lifestyle has a direct impact on your overall health and happiness.

The first step towards financial wellness is measuring your current financial position. Then set personal or financial goals for yourself and your family that will allow you to maintain or improve your current situation. This might involve changing how you think about and manage your money.
 

Ways to save money every month

If you want to start saving, a good first step is to spend less of your income. Changing your behaviour is a factor under your control, no matter how much you earn. Try not to buy on impulse, and before any purchase, ask yourself if this is something you really need, or just something you want.

Make saving for your future and for achieving your goals a priority – create a monthly budget that includes a set amount to be paid into your savings accounts by debit order the day after your salary comes in. This way, the money is safely tucked away in your savings before you can even think of spending any of it on non-essential purchases, so it’s easier to stick to your budget.
 

Consider these 7 tips to help you spend less

Shop with a list

Your monthly budget should include an amount for grocery shopping, so making a list before you shop helps ensure you stick to your budget. It also helps you decide between essentials and luxuries. You don’t have to cut out treats entirely, but making your list according to your budget will help you decide how much must go to essentials and which luxuries you can afford with what’s left.

Try buying cheaper no-name brands of your monthly staples in bulk. Sign up for store loyalty reward programmes and look out for discount vouchers and coupons in store marketing – every little bit helps.
 

Pay off your debt

Every cent you pay in interest on a debt is money you could be saving instead. The faster you can pay off retail store accounts, personal loans, credit cards and even vehicle or home loans, the less interest you’ll pay in total, and the more money you’ll have to put into savings.

 

If you spend only R100 a week on gambling … you’re still laying out more than R5,000 a year

 

One way to pay off any debt faster is to pay more than the minimum payment owed every month, if you can afford to. If you focus your extra payments on the smallest loan first, you’ll pay it off completely in the shortest time – this can be excellent motivation to continue your strategy with the next-smallest debt, and so on. But there are several strategies to consider, including tackling the debts with the highest interest rates first.

A consolidation loan is another solution – you are left with just one loan payment a month to take care of, and if the interest rate on your consolidation loan is lower than the interest you were paying on the debts you’ve consolidated, you’ll also save more.
 

Break unhealthy habits

Smoking, drinking alcohol, snacking on sugary, salty or fatty treats when you’re bored, dependence on recreational or prescription drugs – you’ll be surprised at how quickly the costs of bad habits add up. For example, a pack of cigarettes a day, at around R40 a packet, means you’re spending R1,200 a month. That’s more than R14,000 a year that you could have saved or invested. Breaking unhealthy habits can improve both your physical and financial health.
 

Don’t gamble

Whether it’s sports betting or casino games, the odds against you winning a fortune are huge, while there’s a much bigger chance that you’ll make a loss. Even if you spend only R100 a week on gambling, telling yourself it’s worth it for the slim chance of striking it rich, you’re still laying out more than R5,000 a year.

Putting that money into a savings account is a much better way to make it grow. All it takes is patience – perhaps less patience than is required to keep playing the same 6 numbers every week for 20 years and never hitting the jackpot.
 

Get creative with gifts and entertainment

A large family and a wide circle of friends are a blessing in so many ways, but they also mean loads of birthdays, weddings, anniversaries and other occasions that require gift-giving. If you always want your present to show the recipient how much they mean to you, costs can add up fast – the same goes for socialising with loved ones at restaurants and clubs.

 

Your first step on your savings journey is to begin saving in an emergency fund

 

So, get creative – do you have a craft or hobby that enables you to create home-made gifts tailored to your loved ones’ tastes? Would they appreciate a gift of a service, like babysitting or some home DIY instead of a store-bought present? Giving a gift that acknowledges and celebrates your relationship with the recipient is much more meaningful. And if everyone in your social circle takes turns to entertain each other at home, you’ll save a lot more on the costs of socialising too.
 

Grow what you can

Even if it’s only fresh herbs in a pot on the windowsill, any food you can grow yourself is food you don’t have to buy. If you have the space, the time and are prepared to learn the skills, consider growing your own fruit and vegetables in whatever garden space you have. It’s amazing how much you can grow, even in planters on a balcony. Join your local social-media gardening groups, and you may even be able to sell your surplus produce or swap it with other gardeners for crops you don’t grow.
 

Share your savings goals with your loved ones

Talk to your family and friends about your savings goals, so that they can encourage you to achieve them. They can then give you a friendly warning when you’re planning to spend money that isn’t in your budget. Knowing what you’re saving for will also help them understand why you’re so careful about money – that you’re being thrifty, not ‘stingy’.
 

Start with savings, then proceed to investment

There’s a lot more to learn, especially when you start moving from saving into investing, and we explore the subject in several other blogs. But you can start with the basics: your first step on your savings journey is to begin saving in an emergency fund – money that you can access within 24 hours if you’re hit by unexpected expenses.

You can do that right away with as little as R1 by adding a Nedbank MyPocket facility to your Nedbank transactional account. Build up your emergency fund monthly in MyPocket – or up to 10 different MyPockets dedicated to different savings goals – and you’ll protect yourself against the proverbial rainy day.

But the trade-off of availability is often a lower interest rate. Savings in your MyPocket account won’t grow fast enough to outstrip inflation, because that isn’t the purpose of an emergency fund. But you can use your MyPocket accounts to build up your savings until you have a big enough deposit to open a Money Market account – which will allow you immediate access to the money, but at rates that compete well with inflation.

Once you have enough saved for emergencies, you can keep repeating the cycle of saving in your MyPocket and Money Market accounts until you have a lump sum large enough to deposit into investments that lock your money up for longer, but which deliver a return that keeps your money growing faster than inflation.

For more money management tips, download your free copies of Nedbank’s The Essential Guide to Money Management  and The Consumer Education Handbook.