Life is continually throwing curve balls and from time to time individuals will have to deal with unexpected bills, fuel price hikes, higher interest rates and a poorer exchange rate. The lack of an emergency fund can create a financial disaster, whereas having one can give a consumer a financial advantage. It is therefore important to draw a line between savings for emergencies and savings for everything else.
How do consumers then go about saving for those unforeseen emergency expenses this 2018? Matthys Potgieter, spokesperson and debt expert at DebtSafe, recommends the following:
Budget, budget, budget
Have a proper budget in place (R1 000 to R1 500 per person in the household, per month) and keep record of all purchases by scanning through bank statements. It is important for consumers to review their budget on a regular basis and keep an eye on all their expenses. They will then have a clear indication of where their savings’ goals are at, and when they need to adjust the emergency savings’ budget to put in more money during 2018.
Start saving small
Set an emergency savings goal amount for each month, starting with a small amount at first and then build it up from there.
Cut back on luxuries and down scale!
Trim on monthly spending by eating at home and avoiding certain daily purchases like takeaway meals. Downscaling is not the end of the world. Consumers can certainly take a look at alternative options: the type of home and car(s) they own as well as various luxuries that do not really add value to their life. By leading a simple life they can save quite a lot of money.
Put any bonuses toward the emergency fund
Aim to put a bonus or tax refund (SARS) away for emergencies this year (referring to all those lucky consumers of course).
Sell unused goods, recycle and try some DIY
Do some spring cleaning around the house and sell unused goods to add more money to the fund. Consumers can make 2018 their “green” year and take their recyclable goods to local drop-off points and buy-back centres – the money may not be much, but every bit helps.
South Africans are creative and can also learn how to do-it-themselves. DIY improvements will include home repairs like the leaking kitchen faucet – saving consumers quite a few bucks.
Review insurance, medical aid and gym memberships
Now is the ideal time to review memberships (like gym costs) and contracts. There are various and possible cheaper ‘products’ and supplier options available.
Consider a second income
Consumers can consider additional income by using their own existing skills such as tutoring, or other opportunities like becoming a chauffeur and adding more cash to your pocket. People also tend to “sell” their knowledge and services online these days, either through YouTube adverts or Fiverr, FNB PayPal, Amazon Mechanical Turk and Upwork. Take a look at Lifehack for other great ideas. Although a second job is not a walk in the park, if individuals have the time and determination, the extra money can certainly help them to save more cash each month.
Chat to a financial advisor about outstanding credit
Consumers need to talk to their financial advisors and make sure they review or reshuffle some credit facilities. This can lead to more savings.
By saving a bit in an emergency fund, South Africans can be in the position to tackle those emergency bills when they start coming in. Even the minimum savings can help.