For many people, it can seem impossible to save, especially in a slow economy. However, with some careful financial planning, setting aside savings can often be achieved.
We take a look at the best ways you can save in the short term
1. Notice Deposit
These accounts allow consumers to deposit between R100 upwards for a definitive notice period. This period then determines how quickly you can withdraw the funds.
According to an Absa in-branch consultant, notice accounts are one of the best options if you want to save for a short period while still earning decent interest.
Do your homework and choose a savings vehicle that’s best suited for the period for which you want to invest, and for the amount. Various banks have different interest tiers that can be accessed by investing certain amounts of money for certain periods.
2. Flexi Fixed Deposit
While this style of saving is typically more suited to lump-sum savings, it allows you to systematically withdraw your money in certain increments. This allows limited access, while still encouraging you to spend wisely instead of impulsively.
Here you have the option of depositing funds any time you please, while making withdrawals of up to 50%. Interest is determined by the chosen investment period and is offered in a tiered system that can range between 2.25 and 4.5%.
Ensure that the investment periods allow for withdrawals at times that suit your needs.
Other tips to be mindful of when saving over a short-term period are the following:
- Choose your savings tool correctly: Saving is usually geared towards a specific goal. For this reason, before deciding which savings tool you would like to utilise, ensure that it is best suited to the amount and time specifications you’re aiming for.
- Budget correctly: Before tackling a savings plan it's important you understand how much money you want to save and then plan accordingly.
According to the Absa consultant, the key to budgeting correctly is being realistic about how much you can afford to save. Many people start out in savings vehicles and soon give up because they can’t afford the financial commitment. It’s better to save a small amount, such as R 100 a month, especially in a compound-interest bearing account, than not at all.
- Put a stop-order in place: Saving requires discipline. If you’re concerned about the commitment, put a stop-order in place.
A stop-order ensures that you’re actively saving each month without having to think about it. You simply set the date, stipulate the amount and it acts as an automatic debit order.
- Use cash instead of credit: While you may be tempted to swipe your credit card, it’s better to use cash. It will help you keep track of your expenses. You’ll also save on credit interest fees.
“Make a rule that if you can’t afford to buy an item in cash, then don’t buy it at all,” the Absa consultant advises.
- Appoint a buddy: Find someone you trust to help keep you accountable. This means checking whether you’re actively saving and also ensuring that you don’t splurge with your savings at any time. While it may be hard to open up to someone about your finances, it can help greatly in keeping you on track.
It’s always a good idea to have a savings plan that you’re actively following. This ensures that, should anything unexpected arise that may put strain on your cash flow, you’ll be covered.
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