What Is The Best Way To Save Money In South Africa

What is Money?

Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context.

What Is The Best Way To Save Money In South Africa?

1. Make paying yourself a priority

Probably the very best tip for saving money is to pay yourself first. Aim to save at least 10% of your earnings before tax.

If you think of your savings like you would any other bill, you’ll ensure that saving becomes a habit and start building that emergency fund or nest egg.

A good way to force yourself to save is to automate the process. Set up a direct debit so that a certain amount of money is moved directly from your income to a separate savings account at the start of each month.

2. Start tracking how you spend

Just by watching where you spend your money, it’s likely that you’ll start spending less. Begin by noting how much money you spend daily and what debit orders you have in place, so you can determine your current spending habits.

Then decide which of your expenses are needs versus wants. Remember, your needs come first. If there’s extra money to spend after you’ve saved a predetermined amount, you can spend it on your wants.

A template, such as one of these free personal budgeting templates from Microsoft, may help you track and manage your budgeting.

3. Review medical aid and insurance policies, and bank charges

You may be able to save thousands of rand a year by reviewing your medical aid, insurance, and bank charges annually, and either negotiating better rates or shopping around for better offers.

It’s worth trying to negotiate better rates or shopping around for better offers on:

  • medical aid
  • home building insurance – also update and re-examine your household inventory to avoid over-insuring your possessions
  • car insurance, given that the market value of your car will depreciate each year
  • bank fees, including facility and credit fees; don’t be afraid to ask about the different products on offer and how fees are bundled.

You can also reduce costs by avoiding other banks’ ATMs and, where possible, signing up for automatic bill paying, to avoid any late fees.

4. Reduce phone costs

Note how much time you spend on your phone for a few days, tracking the calls you make and the data you use. Then investigate whether you’ve got the best possible package/plan.

Also, consider switching off your phone at certain periods of the day and check for and remove any apps that use data without you even knowing. The savings that result could add up to hundreds of rand.

5. Watch your car expenses

Regular maintenance of your car ensures it lasts longer and may help you avoid major costs three or four years down the line.

Currently, South Africans spend more of their salaries on petrol than most other nationalities. So also do what you can to reduce your fuel costs.

For example, save on petrol by:

  • planning routes and combining tasks to minimize the number of trips
  • have your car serviced at the recommended intervals (but shop around for a good deal on servicing)
  • have your vehicle’s wheel alignment checked and keep your tires at the optimal inflation to minimize resistance
  • close your car windows when driving to reduce drag
  • reduce your car’s weight by clearing the boot of unnecessary items
  • keep your speed to a minimum to reduce wind resistance
  • use the air conditioning sparingly.

If you have the opportunity to move so you can live closer to work, do so. It makes sense to invest what you can in a home, which is an appreciating asset, rather than spending on petrol and vehicle maintenance.

6. Manage your grocery spending

Once you’ve figured out your monthly budget, you’ll know how much you can afford to spend on groceries.

Stick to this limit by planning your meals in advance, listing what you need to buy, and then buying everything in one trip.

Limiting the duration and number of shopping trips you make is key to avoiding temptations and unnecessary spending.

Also, be both wary and aware of specials. They can be useful if they’re on goods you’d buy anyway. However, they can also lead you to impulse buying.

7. Reduce spending on electricity

Eskom’s electricity prices increased by roughly 653% between 2007 and 2022 (while inflation over that period was 129%).

You can reduce your electricity costs by following common-sense tips like these:

  • limit how often you open the refrigerator and ensure you close it as soon as possible after opening it
  • switch to energy-efficient bulbs
  • when it’s time to replace appliances, invest in ones with high energy efficiency ratings
  • reduce the temperature of your geyser to 55°C or less and consider installing a timer on it (or switch it off and on again manually)
  • switch off the TV, appliances, and lights when not using them
  • insulate your home properly – this can save dramatically on heating and cooling costs
  • run full loads in the washing machine and dishwasher, and use cold water where possible.

8. Pay off credit card debt

Credit card debt can be taxing on your psyche. So halt your credit card spending and focus on paying off debt, one card at a time.

Organise cards by interest rates, from highest to lowest, and pay off the card with the highest rate first.

Pay as much as you can every month. Also, see if you can make a dent in your debt by paying more than the minimum balance. This will reduce the interest you have to pay.

9. Switch to a healthier lifestyle

Bad habits can be expensive.

For example, a single pack of cigarettes in South Africa can cost as much as R53, for a premium brand. Someone who smokes a pack a day at that price would save roughly R1,590 a month, or R19,080 a year, by quitting. Even savings of half that value could be put to good use.

The same can be said for daily alcoholic drinks, sweet treats, and expensive cappuccino habits. If you manage to quit bad habits, the money that you would have used on them can be used toward paying for other expenses.

You may also become eligible for lower life insurance premiums and, over the long term, spare yourself from various illnesses.

10. If you have a home loan, pay in extra

Paying even a few hundred rands extra per month towards your bond can:

  • significantly reduce the total interest you pay on the bond
  • shorten your bond repayment period.

Try this online additional payment calculator to get a rough idea of how much you can save over the long term by tipping a little extra into your monthly home bond repayments. Note that in practice, this amount will be affected by the particular terms of your home bond.

How much should you save per month in South Africa?

On average, members should contribute 17% of their salary over 40 years (from age 25 to 65) towards their retirement savings to achieve a 75% replacement ratio, she said.

“A 75% ratio means that for every R1,000 earned before retirement, you are targeting to replace R750 as an income during your retirement.