Behavioural finance shows us that if we have to cut back on our lifestyle in order to save we experience this as "a loss" today rather than as a long term benefit. This feeling of a loss can really demotivate us, so we need to find savings that have a small impact on our lifestyle but a big impact on our long term wealth.
1. Check your bank fees
A common oversight by many young people is not to change their savings account into a transactional account when they start work.
Banks estimate that you save around R80 a month by moving onto the correct package. That is a R960 a year saving! If you added the saving each month to your long-term investment plan you would boost it by R6000 within five years.
Also reduce day-to-day banking costs by only ever drawing cash from your own bank's ATM, and if there isn't one nearby you can use your debit card to draw cash at your local Checkers, Spar or Pick n Pay for less than the cost of an ATM withdrawal.
Also set up a debit order to pay your credit card instalment so that you never have any penalty fees or interest — it will also boost your credit score.
2. Watch the small day-to-day stuff
Do you know that if you buy one cappuccino a day you will spend R6500 a year?
This is not to say that you should stop having the occasional coffee, but if you cut back to three coffees a week you will save R3700 a year or R300 a month. Invest that monthly amount for five years and you have a tidy nest egg of R23 000. The same applies to packing lunch for work rather than buying a meal every day — here the savings could be even greater.
When you go shopping compare prices between the various brands and find out what is on special. Also buy your fruit and vegetables loose — it is far cheaper than the pre-packed options.
3. Save your change
Have you ever wondered how much money you would collect if you saved all those coins weighing down your purse? The answer runs into thousands of rands.
Keep a jar in your kitchen where you put all your loose change at the end of the day. Once it is full take it to your local school's tuck shop or even your corner café. They will be only too happy to take your coins in exchange for notes.
Remember though not to just spend the money at the corner café — have a goal for that money and add it to your investment or to fund the festive holidays.
Article continues on page two: seven more ways to save without cramping your style (including a sneaky mind-trick to pull on yourself)...