Savings levels are an indication of the future prospects of a country. The last eight years saw a boom in consumer spending in South Africa, much of it on credit. Debt counts for around 75% of our disposable income. We save around 15% of income but households actually have negative savings rates. Which does not bode well for future prosperity. So if we wish to improve the economy saving today for tomorrow is the way. So what can you do about your savings accounts?
- Compare savings accounts
- Choose the right type for you
- Think long term
Savings accounts often come in for flak because they don't pay the best rates of interest sometimes not even covering inflation. Savings accounts are not investments, savings accounts are a way of setting aside capital that would otherwise be spent. 6 Six percent is better than the zero percent you get on money that you have already spent, or having to pay extra on spending from credit. When you save you set that money aside for another day.
Savings allow you to protect yourself from future shocks, if you have been living on credit for the last while you are more than likely feeling the recession bite much harder than those who had savings accounts. A savings account can help buffer you against the vagaries of the global economy and a rule of thumb is to have set aside at least three months of your expenses in order to provide a buffer against any sudden changes to your circumstances. Start saving today for a better tomorrow.