You don’t have to put away thousands to see the benefit of savings. In fact, starting small will not only give you the confidence that saving is possible, but will also help with your finances in the long run.
“Starting a new savings habit this year will probably be the best financial decision you can make,” says Ryan Prozesky, CEO of Value Banking Solutions at FNB.
Herewith a few tips to get started.
Find a suitable account
Now that you have decided to save, you need an account that is best suited to your new savings habit. This needs to be separate to your bank account so that you aren’t tempted to spend your savings.
“The trick is to make the bit of money you are saving work the hardest for you,” says Prozesky. “This means it must be easy to manage and earn interest on any amount that you put away.”
For example, FNB’s Savings Pocket, is automatically linked to FNB’s Easy and Gold accounts. Transfers into and out of the Savings Pocket account are free and the account offers an attractive interest rate of 5.5%, which is earned from as little as R1 of your savings. There is no notice period to access the funds and also no monthly fee charged.
“Have a look at what your bank has to offer,” says Prozesky. “You shouldn’t have the excuse that you ‘don’t have anywhere to put your money’.”
Create a goal
Now that you have an account that will work for you, you need to choose a savings goal.
“If you are a student, starting out in the job market, or have just never put any money away, choose an amount that is manageable,” says Prozesky. “This can be R50 a month to a couple of hundred, the important factor is to pick an amount and stick to it.”
Setting up a monthly scheduled transfer into this account is a great way to make sure that you “pay yourself first” and ensure that you are sticking to your committed monthly savings amount.
Find ways to save
What is great about saving small is that you don’t have to commit to unreasonable lifestyle changes, such as never going out again.
“By choosing to stay in once or twice in the month could save you over R100,” says Prozesky. “This means you can still have fun while staying committed saving.”
There are plenty of other ways to save, such as catching a lift a few times a month with a friend or car-pool to save on petrol or travel costs; or compare brands of items you use regularly and choose a cheaper one.
FNB offers an innovative way to help customers to save through ‘Bank Your Change, which once activated, automatically rounds up small amounts each time a customer swipes his or her card. The change is then transferred and stored in the Savings Pocket.
“The power of small saving is really seen here, where on average 1.4 million customers have managed to save an average of R74 million by rounding up their change,” says Prozesky.
This equates to an average of R51 Bank Your Change savings per month per customer transferred into their Linked Savings Pocket.
Create money for savings
“Don’t assume that you have to give up something in order to save,” says Prozesky. “You can also make additional cash to save, such as going through your old stuff and selling anything you don’t need, taking on an odd job a couple times in the month, or even small money makers such as baking goods and selling them at work.”
Understanding the bigger picture
Understanding how small savings benefit you in the long term, will keep you motivated.
For example, if you put away R200 a month for 12 months in an FNB Savings Pocket with an interest rate of 5.5% you will have R2471 at the the beginning of 2018.
If you put the full amount above into your credit or store card and where you are paying for example, 20% interest, you will save yourself just under R500 in interest. The trick is to keep on saving and your small savings will reap big rewards.
“Saving small is a great way to create good financial habits and see real benefits,” concludes Prozesky.