Growth & Jobs | Save strategically to build financial wealth – Rose Miller

ROSE MILLER, manager, strategic empowerment programmes at the JN Foundation, says it is important for persons to prioritise saving if they intend to create personal wealth. She said saving is a first step towards achieving financial security, and to successfully develop this habit requires a high level of discipline, great personal sacrifices and the ability to delay personal gratification.

“I have no money to save is usually a first response when you encourage someone to save. However, this is not always true. We can all find something to save no matter how small. Denying yourself that $500 slice of cake once a week or bypassing that fancy or expensive outfit are some examples,” she said.

Miller provided five other money-saving tips which can assist persons to build savings.

RECORD EVERY EXPENSE

Miller said the first step to start saving money is figuring out how much you spend by keeping track of all expenses — that means every trip to the supermarket, household items bought as well as regular monthly bills.

“Record your expenses. There are several options to do this. It could be done using pencil and paper, a spreadsheet or a free online spending tracker or budget app. Once you have your data, organise the numbers by categories, such as transportation, food and utilities, and total each amount. Use your store receipts, credit card and bank statements to assist and make sure you’ve included everything,” she informed.

FIND WAYS TO CUT SPENDING

She advised that if persons can’t save as much as they would like, one option is to cut back or even eliminate expenses considered unnecessary or non-essentials, such as entertainment and dining out.

“Look for ways to save on your fixed monthly expenses, such as your cell phone or cable plan,” she recommended.

Other ideas for trimming everyday expenses include conserving on utilities such as water and electricity and reviewing recurring charges for subscriptions and memberships, cancelling those you don’t use or those which can be discontinued whether temporarily and permanently.

The JN Foundation manager said one should examine the cost of eating out versus cooking at home, for instance. “Plan to eat most of your meals at home, and research local restaurant deals for occasions when you want to treat yourself. Preparing lunch and dinner at home will also help you to take charge of your health by preparing more nutritious meals,” she said.

Impulsive spending should be tempered: When tempted to buy on impulse, waiting a few days can be useful as one often realise the item was not a need but rather a want. The delay provided a more balanced perspective and very often you are spared spending on something for which you had not budgeted, advised Miller.

SET SAVINGS GOALS

“One of the best ways to save money is to set a goal. Start by thinking about what you might want to save for both in the short term – usually one to three years – and the long term, which is four or more years. Then estimate how much money you’ll need and how long it might take you to save it,” she advised.

MAKE SAVING AUTOMATIC

Almost all banks offer automated transfers between your chequeing and savings accounts. You can choose when, how much and where to transfer money or even split your direct deposit so that a portion of your salary goes directly into your savings account.

“The advantage: You don’t have to think about it, and you’re less likely to spend it. Additionally, with this consistency, savings will be accumulated at a faster rate,” she said.

CREATE AN INTEREST-BEARING ACCOUNT

For most of us, keeping our savings separate from your chequeing account helps reduce the tendency to borrow from savings from time to time. If your goals are more long-term, consider products with higher yields like a certificate of deposit or an investment account, for accelerated growth, she said.