When it comes to saving, we all think it is something that can be done later down the line and is usually for something specific.
The truth is, saving money, whether it be for a car, a house, or a new television set, requires the same amount of diligence and commitment.
When saving for a car, however, it is not only the car you will have to think about. It is also the maintenance costs, the insurance premiums, fuel, and any other unexpected costs (i.e.: a breakdown).
Why You Need An Emergency Fund
- If you lose your job unexpectedly.
- You forgot to pay your property tax.
- You develop a debilitating illness.
- Your car breaks down.
How To Save Money For The Big Things
Step 1 – Create a Monthly Budget
Keep a tally of all your monthly expenses, i.e.: rent, mortgage, water and electricity, food, insurance, etc. Once you have pinpointed how much money you have after paying for all these expenses, you can figure out, realistically, how much you can afford to put away each month. It may be R1000 or just R200. Whatever you decide on, stick to it religiously. It will pay off in the long run.
Step 2 – Make Savings Automatic
It can be so easy to look at your bank account and think that it is at a satisfactory level. Avoid falling into this trap by making your savings automatic, i.e.: in the form of a debit order. This means that once a month (usually after pay day) a portion of your salary will go straight into a savings account where it can accrue interest and, slowly but steadily, increase.
Step 3 – Save 100% Of Windfalls
After tax season, you may receive a sizeable rebate and your mind may be spinning with what to “treat” yourself to. Resist the urge to get that jet-ski or bike you do not need by saving all additional income you may receive.
Saving 100% of your windfalls will ensure you are contributing ‘chunks’ of money towards a potential, real financial emergency (as mentioned above).
Step 4 – Take On More Hours At Work (If You Can)
While this may seem quite disagreeable to you, working extra hours can ensure a steady flow of income that can go straight into your savings account. Think of it as your “overtime” account. It can be highly satisfying to see how one or two extra hours, or shifts, at work can allow your Emergency Fund to grow exponentially.
Step 5 – Stay Diligent
Whatever happens, learning how to save money starts by developing a savings ritual and sticking to it. When you receive your salary every month, and a designated portion goes to savings, do not be tempted to dip into your savings as a result of overspending.
A good way to look at your monthly budget is to see that automatic monthly transfer as your money ‘gone’. This means whatever goes into your savings account should not form part of your monthly budget.
By becoming strict with your saving habits, you have assured financial stability, should an unexpected expense arise. Certain unexpected expenses may include a broken fan belt on your car, a hospital fee for a family member, or a burst geyser in your home that needs replacing (if not under warranty or insurance).