It’s National Savings Month. Here are some tips on starting to save early

In 2001, then-Minister of Finance Trevor Manuel launched National Savings Month, to raise awareness about the importance of saving. The campaign is run in July every year by the South African Savings Institute (SASI). The Daily Vox asked the acting CEO of SASI Gerald Mwandiambira why young South Africans aren’t saving and how they can start.

Is it easy or difficult for people in their 20s and 30s to save?
It’s actually very easy for them to save because they don’t have the accumulated bills that older people have; they have no children, they don’t have bonds and a lot of other things that you acquire as you get older. It’s easier for someone who is younger to start saving than when they are much older and already making their way to responsibilities.

What is the biggest obstacle to saving and how do we get around it?
Waiting until you earn a much bigger salary to start saving is the biggest obstacle. When you start working you need to start saving from your first salary because the longer you delay, the more the amount of money you need to save starts doubling up. For every five years you delay to save, the amount doubles. Sometimes people find that they can’t save when they are earning big salaries because the portion of money you then need to save from your salary has doubled too. That’s why it’s always advisable to start saving as early as possible.

How does black tax impact on young people’s ability to save?
Black tax is nothing new; as Africans we’ve always been supporting our families. I think we are in a situation where a young lot of young people in this modern environment are making poor financial decisions, which are impacting their ability to support their extended families. We are just not able to manage our finances as well as we used to. If you look historically, most families were looked after by a patriarch or grandmother and black tax applied. Us saying that black tax is an issue now is a reflection that we are more about chasing things that are not within our reach and wanting them quickly, which reduces the availability of resources.

How can one save while paying black tax?
All is takes is financial planning which is something that most people are lacking. Financial planning and knowledge are important because you get around your needs and not your wants. You put aside the amount of money that you can contribute towards your family. Financial planning starts with being able to sacrifice for savings and investments because one’s future is important. The problem is that a lot of people are thinking that we are only living for today. The extended family is not an excuse not to save because it’s not new to only our generation.

If you have a choice between saving and paying off store cards or credit card debts, what should you do?
Debts and savings are not opposite, hence you need to do them both at the same time; because if you lose your job and your store cards are not up to date you are still going to be in trouble. Saving is not an option but something that you need to do all the time. If you at least have savings you can negotiate your store cards payments and still look after your family; and also have something to live off while you’re looking for another job. Delaying your saving at the expense of debts is not wise because should you lose your income you’ll be in a worse situation.

What are the simple ways for people to save?
Saving in general is not easy; it requires discipline, commitment, and willpower. But once one has that commitment and willpower; it becomes easy to save for their future goals. South African youth are able to save; they just need the discipline and education and that is why SASI has partnered with Absa to raise awareness and get that message across. It’s hard to save if you don’t have enough information. That is why we say we give you information and you use your discipline and start saving. Young people also need to rely on technology and that being automation; set up your debit order and stop order to save. One can also join a stokvel or an investment club with their friends.

Featured image via Financial Security First