South African consumers are under a lot of financial pressure following the recent interest rate hike as well as rising inflation and increases in the cost of living.
According to Lephoi Mokgatle, head of Product at Momentum Money, the current economic climate further emphasises why getting the most out of your money is essential.
“Making your money work for you simply means taking practical, uncomplicated steps to make sure you can realise your financial goals,” said Mokgatle.
Here are three tips to make your money work for you:
Saving money
It is important for people to start saving money in a savings account or an emergency fund that they can use for those rainy days, instead of getting further into debt by borrowing money for unexpected expenses.
Although you may not see the kind of returns that are associated with investing, saving is a practical way for people to start their money journey and have good financial habits.
Mokgatle said that people need to determine how much they are willing to save every month and work towards it.
Justin Asher, head of marketing and strategy at upnup micro-investment app, said it was crucial for people to have clarity about their savings goals, and what they would like to achieve by putting funds away for a later date.
Examples of savings goals include buying your own home, having a down payment for a car or a holiday overseas.
Start investing
According to Mokgatle, it is never too early or too late for people to start investing.
“Investing is buying financial assets such as shares, bonds, stocks or cash instruments to grow your wealth. Investing is key to creating wealth, reaching your financial goals and making your money work for you,” she said.
Be a conscious spender
Mokgatle said that rising costs have made most consumers more conscious about how they spend their money, but more emphasis needs to be put on being a conscious spender.
Knowing the difference between a ‘need’ and a ‘want’ is vital for people to become conscious spenders.
According to Farzana Botha, Segment Solutions manager at Sanlam Savings, a ‘need’ refers to something vital, such as your home and groceries for you and your family, while a ‘want’ is a nice-to-have, like a daily takeaway cappuccino or a takeaway lunch at work.
Botha said: “A good exercise is to scan last month’s bank statement and divide all your expenses into what you spent on a ‘need’ and what you paid for a ‘want’.“
Mokgatle said that people can be conscious spenders by making a shopping list before they go to the shops and sticking to that list. People can also actively shop around and do their research for the best deals online before they go shopping.
“Tracking tools that track your monthly spend, as well as smart online planners that show you how much of your money is left before you receive your next regular monthly income, are just a couple of services consumers can tap into to make smarter spending decisions,” Mokgatle said.
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