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How to save when you have very little

16 November 2015
5 minute read

wallet in back pocket

Saving seems impossible when you’re barely making ends meet. When we publish blog posts about the different ways in which people should be saving, we often get feedback from our readers saying that having short-term savings, long-term savings, retirement plans and emergency funds are impossible goals on a salary of R3 000 to R5 000 a month – and of course that’s true.

However, it is vital that even the lowest income earners find a way to save money every month. If you don’t one medical bill, one funeral or one broken fridge could mean that there’s no money for food in that month or that you have to borrow money. Because of this, we have put together ten savings tips for people who struggle to make ends meet but want to put away something for the future.

1. Prioritise savingThe first step to making sure that you start saving is to make it a priority. If you wait until the end of the month to save, you’ll never have anything left to put aside. Whether you are saving in a bank account or under your mattress, make sure that you put aside a portion of your money the moment that you earn it. Always remember to pay yourself first!

2. Remember that no amount is too smallEven if you can only put away R100 a month, do it. R100 saved up over 12 months will have you R1 200 by December. Or, at the very least, keep a coin jar in the cupboard, and every time you get loose change, drop it in there. You’ll be surprised at how fast it adds up.

If you can possibly manage R300 a month, then a number of investment products are available to you, and you can watch your money grow, with interest.

3. Find a way to earn extra incomeIf there isn’t enough money to get to the end of the month, let alone to save, try to think of ways that you could earn extra money. Perhaps you could get a Saturday job doing extra work, offer your services as a babysitter, sell catalogue handbags or jewellery, cook and sell food that people like to eat or sell second-hand clothes on behalf of all your friends and neighbours and take a percentage of the profits.

Find out how these three people used their skills to earn some extra money, or learn about how you can use your phone to bring in some cash. Always allocate any extra income to savings.

4. Shop smartlyFind ways to buy your essential food at its cheapest. Dedicate a weekend to working out which is the cheapest store in your area for buying your basics, and make sure you always shop there. If you have the time, it’s also a good idea to check out their weekly special offers and buy these in bulk if you can. You can even team up with one or two other people in your area and pool your money to buy in bulk, and then split the food.

Keep track of how much you’ve saved by shopping smartly, and put the extra money into your savings account or box.

5. Save sociallyIt can be tough to save on your own, which is why many South Africans save through stokvels. Once saving becomes a social activity, and you have bought into the stokvel’s rules, you’ll find that saving becomes much easier. You will also benefit from earning a better interest rate at the bank because of the larger amount your saving society is depositing, and the regularity of the deposit.

Here’s how to get started.

6. Give something upThere are usually a few luxuries in even the tightest of budgets. Of course, these things make life a little easier, but if you’re not managing to save for your future, then some of those luxuries really should go. Although it’s hard to give up, smoking costs you a fortune. Water is the best drink for your health, so cut out any soft drinks or takeaway coffees. And if you spend a small amount of money on a hair dresser or inexpensive clothes every month, consider getting an easier-to-maintain hairdo or taking a break from buying new things.

7. Don’t buy anything on creditIf you don’t have enough money to save, you certainly don’t have enough money to buy things on credit. When you purchase on credit, you have to repay the money every month and the credit provider will add on interest. This costs you more than if you’d saved the money in the first place. The rule is simple: save first, THEN spend.

8. Plan for funeralsFunerals are a big cost for many low-income families and helping out a family member can easily eat into any money that you have saved. There are some very affordable funeral cover products available that cover you and your closest relatives. Have a meeting to discuss taking out this kind of cover with everyone in your family, agreeing to limit the cost of the funeral to the size of the payout, so that these unexpected expenses don’t eat into any savings you have made.

9. Try to stay healthyGetting sick costs you money in visits to the doctor or clinic, medication and, in some cases, lost work days. Although there’s no magical way to avoid getting sick – or we’d all be doing it – you can significantly reduce your chances of catching a virus by washing your hands frequently. The Centre for Disease Control recommends washing your hands before and after preparing food, before and after eating food, before and after caring for someone else who is sick, after using the toilet, after changing nappies, after blowing your nose or coughing and after handling garbage. It’s also worth eating fresh fruit and vegetables – which are cheaper than meat anyway – to boost your immune system.

Taking these steps will help you to reduce your chances of blowing your savings on a bout of illness.

10. Use your phone with careA fantastic world of connectivity and functionality has opened up to users of smart phones in South Africa. But smart phones use a lot of data, which means that using these wonderful services can quickly deplete your airtime. If you have a smart phone, make sure that you have turned off all the “auto sync” features in every app that you use. This means that they won’t send and receive information unless you tell them to. If you must use data, it is cheaper to buy a data bundle than to use your airtime on checking your email and Facebook. Here are some more data saving tips.

Get saving!It can be hard to think about saving when you’re already struggling to feed your family and get to and from work. But it’s important to try, even if it’s difficult. Start immediately with one small step in the right direction, and you’ll be encouraged as you watch your savings grow.

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