While it may feel like a big task to find extra money in your current budget that could be put towards your savings, there are smart ways to save without noticing.
If you find it hard to save, blame human psychology. Behavioural scientists have found that we feel loss far more greatly than gain, which is why asking us to cut-back on our lifestyle makes us very unhappy. We feel the sacrifice immediately, but only reap the benefits in the future.
Bank your change
Remember the piggy bank from your childhood? You’d be surprised how fast those coins add up. Every day, empty your wallet of any coins and put these into a jar. If you do this all year, by December you’ll have a little bit of extra money to spend over the festive season or on holiday.
Set up a debit order
You can set up a debit order into an investment for as little R300 per month. Make sure it goes off the day after payday so you don’t spend it. Considering how often you swipe your card for purchases you can’t even remember – do you really think you’ll miss R300 that much?
Commit your future salary
When you set up the debit order, include a 10% annual escalation. Your savings will increase each year without you having to do anything at all.
When you receive your annual bonus, ask your employer to contribute 27,5% to the company retirement fund tax-free. That way, the bonus is paid out after you’ve put money aside so it won’t feel like much of a sacrifice. At your next annual salary increase, ask HR or your adviser to increase the percentage of your salary that you pay towards a retirement fund. You’ll still increase your take-home pay, but a portion of your increase will go towards boosting your retirement savings.
Downsize your coffee
Remember the days when you went to buy a coffee and it only came in single-sized cup? These days, most coffee shops offer a choice of small, medium or large. This is really aimed at getting us to spend more, as people are more likely to purchase a medium-sized cup. The small cup is usually 250ml, which is the same amount we used to be happy with, so rather go for the smallest version of your daily coffee purchase and save anywhere from R3 to R5 – those rands add up over time.
Work those loyalty rewards
Most banks and major retailers offer reward programmes to loyal, regular customers. Keep those rewards, especially those that convert to cash or vouchers, to supplement your festive season spend.
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