Anyone grappling with the ‘new norm’ of paying through your teeth at the supermarket and petrol pumps will agree it isn’t easy to keep money in the bank these days, or put any of your salary away for a rainy day. But, it is also not impossible.
The rising cost of living has left even the most astute budgeters scratching their heads or dipping into emergency funds. People feel powerless to control their money because everything is just so expensive. It’s literally a case of money in, money out. What is worrying is that most people don’t think they earn enough to put something aside for an emergency fund or retirement.
South Africans are also not great savers, as a recent Business-Tech poll reveals.
The poll of 2 702 readers, conducted in mid-January, shows that the majority of respondents (61%) are allocating 10% or less of their salary towards retirement savings. This equates to more than a third (35%) of middle-class South Africans. By comparison, 23% of readers surveyed are putting away more than 20% of their salary every month towards retirement.
It’s evident that the majority of people are only channelling their income into ongoing expenses, but not into savings, debts and an emergency fund or retirement.
When you’re financially literate, you will understand how to allocate your income toward various goals simultaneously, and prioritise saving.
Building your future and becoming smarter about money is not as difficult as one might think. The web is full of information and resources that will be available you to empower you to understand money better and become more financially literate.
But what exactly is financial literacy?
It starts by building basic knowledge of money matters. Gradually, you gain a confident understanding of financial concepts like savings, investing and debt.
The goal of financial literacy is to give you more control of your finances. It helps you to use your money as a tool to realise your future plans, not simply to cover expenses.
Examples of financial literacy in action are:
• Putting extra money into your retirement savings when you get a salary increase.
• Paying off your smallest debt first and then using that money to make larger repayments on the next smallest debt.
• Maintaining the equivalent of six months’ salary as an emergency fund in a high-interest bearing savings account – and, replenishing it after you’ve withdrawn money from the account.
• Checking your credit report regularly. A good credit score is important for future access to loans and credit.
Even if you don’t have a lot of disposable income, improving your financial literacy will help you to make the most of what you have.
This is the beauty of initiatives like Money Smart Week. It’s an opportunity to learn how to take back control of your finances and achieve your financial goals.
It will help you to make informed decisions that will keep you out of debt and away from risky investments. From there, you can create and pursue financial goals that fully support your vision for a fulfilled life.
Also see: Banking wherever you are – African Bank rolls out new banking pods and kiosks
