The bottom line is that saving is very difficult – if it was easy our savings rate would be far higher. Every age group has its specific expenses. Someone in their early twenties is most likely paying off student loans, possibly have parents to support and have aspirations and finally you have the cash to buy the things you want. Then when you hit your thirties and start earning more, you want to buy a home and start a family. There are always good excuses not to save.

Save first, spend later

What you need to do is to change your attitude towards savings. Look at it not as a “like to do” but as one of the bills you have to pay at the beginning of the month. Set up a debit order, even if it is just R200 and make sure it leaves your account before you spend any money and forget about it. If you are looking for some inspiration I will share a personal experience. About 9 years ago I started saving R200 a month for my son into an investment that just tracks the stock market, nothing fancy. Today, despite one of the worst market crashes in our history, that investment is worth over R48 000. Even if I stopped saving today and just left the investment to grow at a reasonable 10% a year, it will be worth R80 000 in ten years time when my son turns 18. A small amount saved becomes a large lump sum – the key is time. The sooner you start saving, the longer the time the money has to benefit from compounding growth (interest earned on interest).

Finding the extra cash

To find that extra money, look at your budget. There are four areas you are probably overspending: entertainment, cellphone, bank charges and debt.

Entertainment: Research by debt councillors show that entertainment is one area we tend to overspend. Work out a reasonable budget for entertainment and where you can cut back. When you go out with friends, draw exactly the amount of cash you can afford to spend and stick to that limit.

Cellphone: Everyone can cut back on cellphone usage, for example buy bulk SMS packages rather than making calls. Work out how much you can afford to spend and buy pre-paid airtime. When that airtime is used up, it’s gone, you don’t buy more. You may find this difficult in the first month or two, but you will work out how to budget your airtime better.

Bank charges: Speak to your bank about the best account for your needs. You may find opting for a monthly fee for a range of transactions works out cheaper than pay as you use. Also use cellphone banking to check balances –FNB for example does not charge for this service.

Debt: Speak to your bank about debt consolidation. You may find that by putting all your debt into one account you can reduce your monthly payments by lowering the administration costs of having several credit accounts. Find a balance between paying down your debt and saving. For example if you have managed to find R300 of savings by cutting back on entertainment, cellphone and bank fees, pay an extra R150 towards your debt and R150 into a savings account.

Remember, saving is about attitude, not how much money you earn, because the more you have the more you will spend. Interestingly South Africa has one of the lowest savings rate in sub-Saharan Africa despite being the wealthiest country. The key to success is to develop the habit of saving at an early age and every time your salary increases, save 20% of that increase.