Karin Muller, head of Sanlam Growth Markets Solutions, suggests four empowering money moves you can make.

South Africans are not very good when it comes to money management. In March this year, the total outstanding consumer credit balance for South Africans was a staggering R1.45 trillion, according to the National Credit Regulator. There is no time like the present to pull up your socks, tighten your belt, and rein in that spending urge.

1. Track your spending

Get into the habit of recording every cent you spend and you will soon form a clear picture of where your money is going. This exercise can take as little five minutes a day and there are extremely good apps available online for laptops, tablets and smartphones which will help categorise your spending and identify trouble spots, for example, www.imore.com/budgt-iphone-review. Common spending drains include those quick visits to your local coffee shop, bottled water and bought lunches. Cutting back in your trouble areas will free up money for savings. These apps can also help you set up a household budget which is critical if you want to be in control of your finances.

2. Don’t pay off short-term debt with long-term savings

The recent Sanlam Benchmark survey revealed that more than half of South Africa’s pensioners are not making ends meet. There are a number of reasons for this but one of the biggest factors is the depletion of retirement money during working years. When you change jobs, you have two options: to reinvest the money you accumulated during your years at the previous job or to disinvest the lump sum and take your cash out. It is often easier for the employee to take the money than to reinvest it. National Treasury has put forward a retirement reform proposal to address this problem.

Unfortunately, the money that is cashed out is seldom, if ever, reinvested. Forty-six per cent of the people polled in the Sanlam Benchmark survey who withdrew their retirement savings, used the money to pay off short-term debt, and 29 per cent used it to cover day-to-day expenses.  The reality is that it is impossible to ever make up the savings if you start saving again from scratch. This is because you cannot make up for lost time and the savings lose their compounding momentum (compounding refers to generating earnings from previous earnings).

3. Keep on top of your retirement saving

Keeping regular tabs on whether you are on track to maintain your current lifestyle after you stop working is a very smart move. Most South Africans won’t save enough for their retirement, but there is no reason you should join this statistic. Sanlam has made it very easy to see if you are on track to retire comfortably with this simple calculation:

• After working for five  years, you need to have saved 1 x your annual salary
• After 10 years, 2 x annual salary
• After 15 years, 3 x annual salary
• After 20 years, 4 x annual salary
• After 25 years, 6 x annual salary
• After 30 years, 7 x annual salary
• After 35 years, 10 x annual salary
• After 40 years, 12 x annual salary

Ask your retirement fund and RA provider for the current value of your retirement savings, work out your annual salary and how many years you’ve been working for and you’ll soon see if you are on track. If you are not, consult a professional financial advisor to make a plan to increase your savings.

4. Save any bonuses or salary increases

Whenever you receive ‘ad hoc’ money such as a bonus, tax refund or salary increase, keep it separate from your day-to-day expenses and save as much of it as you can. Settling debt is also a smart move to make with this money, but once this is done, anything left over should be used to boost your savings.