You have to try to get into the habit of regularly putting money aside into a savings account as early as possible. If you’ve never put any money aside, it’s not too late to start.
However, before you get started, there are two things you have to consider when saving.
Get ready to save regularly
The biggest challenge with saving is having the mindset that there isn’t enough money to save. If this is you, you need to change this mindset and start from your next pay slip. It doesn’t have to be huge amount. Decide on a monthly amount you’re willing to put into your savings account. It could be as little as R5o. It’s something to start you off and increase into the future. The idea is to first get started.
As soon as your salary hits your bank account, transfer the amount you’ve decided to save into your savings account. If you think you’ll forget this, then set up a standing order to automate the process. Only increase the amount you save when you feel comfortable with the monthly amount you’re currently saving.
Be wise when picking your savings account
You also have to make sure you’re saving into the best account. Therefore, look for a savings accounts with the best interest rate and the lowest fees. You might have to shop around a bit, but it is worthwhile. If you haven’t already opened a tax-free savings account, consider it as an option. Don’t forget to look at notice deposit and fixed deposit accounts. They could offer more competitive interest rates. However, ensure you understand the terms of such accounts.
The main reason for finding the highest rate of gross interest for your savings account is to beat inflation. This is because the interest you receive after inflation will reduce your purchasing power. For example, if a savings account pays a gross interest rate of 8% and inflation is 6%, comparatively, you’ll only earn 2% on your savings. If inflation is at 6% and your savings account interest rate is 5%, you’re losing money to inflation in your account.