Forget over ambitious New Year’s resolutions to save more, spend less and banish your debt. Here are 10 easy things that you can do right now that will make a measurable difference to your finances by year end.
Drawing cash costs you money – whether you visit your bank branch, draw from your bank’s ATM or from another bank’s ATM. It costs significantly less if you draw money from the till point of a participating retailer. Shoprite Checkers, Pick n Pay and Spar offer cash withdrawals to customers, and you don’t have to make a purchase to draw money in this way.
To illustrate, if you are an Absa Flexi account holder and you draw R1 000 once a week from an Absa ATM, you’ll be charged R16.95 for each withdrawal, or R67.80 per month. A cash withdrawal at a point of sale will cost you only R3.95 each time, or R15.80 per month. That’s a saving of R52 per month. FNB customers get free withdrawals at points of sale. But wherever you bank, this is the cheaper withdrawal option.
Whether you make a once-off payment or increase your monthly repayment, you are decreasing the amount you owe and the interest you will pay. For example, if you deposit as little as R300 more per month into your R800 000 home loan, you will decrease the term of your bond to just under 18 years and reduce the amount of interest you paid by R116 595. And R2 000 paid in right now will reduce the term of your bond by a couple of months and save you R11 078 in interest. You can work out how this applies to your bond by using the calculators found here.
The interest rate that you pay on your bond is not cast in stone. If you have repaid your bond regularly every month and the property prices have increased in your area, you can make a good case to your bank for reducing your interest rate. Even a small reduction from 9.25% to 8.75% will reduce your monthly repayments on an R800 000 house from R7 327 to R7 067 and save you R61 740 over 20 years.
Even a small saving of R300 will add up to R3 600 plus interest by the end of the year, which will help with those Christmas presents. There are many different types of savings and investment accounts, and you don’t have to put away a fortune to realise the benefits of saving. So speak to your bank manager about the best option for your needs or have a look at this guide to the best places to invest R300.
While it would be better to have no debt at all, if you must have credit, keep it in one place – and that place should be your bank. Having multiple credit cards at various different retail institutions is costing you a fortune in fees and interest, and makes it very difficult to keep track of all the different amounts of money you owe.
If you have been with one insurer for a long time and claimed over the years, your monthly premiums might be inflated. It always pays to shop around. You can use a tool like www.hippo.co.za to compare different insurance companies’ costs, and then use the information to renegotiate with your current provider or make a switch. Remember that household items that depreciate should also have their value reduced on your current policy, so double check what you are actually paying for.
Do you have a gym membership that you never use? Are there many, many DSTV channels you never look at? Cancel all the little monthly expenses that drain the cash out of your bank account but you don’t actually use. .
Take a look at your lifestyle and your budget and identify one regular costly luxury that you could do without – for instance, your second takeaway cappuccino of the day. If you cut one of those a day at a cost of R20 per cup, you’ll save R600 in a month. But don’t let the money disappear – make a brightly coloured “deposit jar” and keep it on your desk. Put the money you would spend into it each day so that your fund builds up. Deposit the proceeds once a month.
It’s very easy, over the years, to accumulate unnecessary banking products. If you have a savings account that you never use or accounts at more than one bank, remember that all of these are costing you in charges. Cancel any accounts that you don’t use, and pay a visit to your bank to discuss the best accounts for your needs.
If your smart phone is constantly checking for new emails, Facebook updates and tweets, your data charges will be skyrocketing. Go into each app and cancel the automatic synch function so that you have to manually update all your feeds. This will make a massive difference to your phone bill.
While none of these tips require a radical lifestyle change, taken together, they could add up to thousands of rands in savings by this time next year. Start your journey today.