We often complain that we don’t have enough money to save, but it is often the hassle of opening up a savings account and committing to the minimum investment amounts that is the major hurdle. This is especially true for the younger generation who are focused on work, family and socialising to the extent that they neglect looking after their finances.
So, why not sign up for an account or card that saves for you every time you spend?
Old Mutual Money Account
The Old Mutual Money Account is a transactional account where you automatically select an amount between 5% and 15% of every card purchase to be transferred into a money market unit trust in your name.
For example, if you spend on average R5 000 per month using your debit card and set the savings percentage at 10%, you would automatically save R500 per month. This amount is invested into the Old Mutual Money Market Unit Trust which is a low-risk fund which delivered an interest rate of 7.7% last year.
This is an ideal vehicle for short-term savings or emergency savings. If you are saving up for a specific item, when the time comes to purchase the goods you can transfer the money back into your transactional account so it’s available immediately. You can also set up an automatic transfer each month if you want to increase your savings.
This is a relatively new bank account offering from Old Mutual. It is cost effective with a monthly fee of only R4.50 which includes free card transactions. As Old Mutual does not have a branch network the account is driven primarily through retailers so you can draw cash at a retailer for R1.50 or from any bank’s ATM for R8.50. Debit orders are R3.40 and an EFT is R2. This makes it one of the most cost-effective accounts on the market. It is also available to children from the age of 7 years old. A big plus for kids is that the card can be used for online purchases – so your teenager can buy their own games from their own bank account.
FNB – Bank your change
Like the Old Mutual account, FNB’s Bank Your Change allows you to allocate money to a linked savings account each time you swipe your card. The concept is similar to a piggy bank where you would stash your loose change. Rather than putting it into a jar at home, you can actually earn interest on it.
You select to round up to the nearest R1, R5, R10, R20 or R50 and every time you spend, the difference is paid into your savings account. For example, if you selected to round up to the nearest R10 and bought a litre of milk for R13, the transaction would be rounded up to R20 (nearest R10) and the R7 difference is paid directly to your FNB linked savings account. This account pays an interest rate of 5.25% up to 6.3% depending on your balance, which makes it ideal for emergency and short-term savings.
Stash is an app from Liberty that rounds up transactions when you swipe your bank card and invests the digital spare change in South Africa’s top 40 companies, tax free and cost free.
You don’t need to be a client of Liberty ‒ it is available to anyone. It takes just 49 seconds to sign up, link your debit, credit or cheque card to the app, and get R50 free to kick-start your investment journey. Each time you spend on your card, the app rounds up the amount spent to the nearest R10, R20 or R50 and stashes the difference into your investment account.
So when you buy a coffee for R24, Stash rounds this up to R30 and invests R6. If you select to round up to the nearest R20, then it stashes R16. Stash checks your daily bank balance and never transfers more than you can afford, so you don’t have to worry about going into overdraft.
As it is a tax-free savings account, you pay no investment tax. You can invest up to R33 000 a year, up to R500 000 over your lifetime, into your tax-free investment. There are no fees to invest with Stash so you are not penalised when you cash out and can put in or withdraw money whenever you like.
This is ideal for longer-term savings and you can use it in conjunction with the FNB and Old Mutual accounts. You can download the Stash app from Google Play or the Apple Store.
School-Days is a similar concept to the My School card except that each time you use the card, the money goes directly to an account which can only be used for school fees. This could be for your own child, a relative or a child you sponsor. Every time you spend at one of the programme’s retail partners, that retailer contributes a certain percentage of your spend to an untouchable school fees account. This means parents automatically put money towards their child’s education just by doing their regular shopping.
“We have schools in South Africa where the annual school fee is only R5 000 per annum, yet 40% of parents are not paying the school fees. We can change that – if every family raised R200 per month just by doing all their regular shopping with the programme’s retail partners, we could significantly shift the momentum from the non-paying mentality to that of a community of parents that contribute to the school,” says School-Days founder Paul Esterhuizen, who was also the brainchild behind the My School card.
Since the launch of School-Days eight months ago, parents who have signed up have raised more than R6m for their children’s education funding with Dis-Chem, which is the main retail partner. This year School-Days is expanding its partners with bsmart, the consumer purchase card, opening up School-Days rewards at over 10 000 retailers.
Nedbank recently joined as a partner which means that soon Nedbank account-holders can sign up and automatically earn money towards their nominated child’s bursary account every time they swipe their Nedbank debit or cheque card at any School-Days retail partner.
This article first appeared in City Press.