Dear Reader,

How many times have you said “I really should start saving” and come month-end there is always something “more important” to spend the money on?  December is a time when people tend to over spend and get into debt. Come January you are more broke than ever and deeper in debt.

Sometimes the hardest thing about saving money is just getting started. It can be difficult to figure out simple ways to save money and how to use your savings to pursue your financial goals. This step-by-step guide can help you develop a realistic savings plan.

  1. Pay Increase

When you get a pay increase put the extra cash into a savings and start building an investment fund.  You manage before without the extra cash, so rather save it.

  1. Bonus

If you get paid a bonus, save this money too. You don’t need your bonus for living expenses because it is extra money that you can’t count on—that’s why it is a “bonus” to your normal salary. Bonuses are perfect for saving. If you need your bonus for living expenses, you probably have other financial challenges that need attention first.

  1. Overtime pay

Some companies still pay their staff for overtime worked.  If this is the case with your company, then treat this extra money as more money to add to your savings.

  1. Commission earners

If you are a commission earner, there may be months when you have done exceptionally well and receive a large commission cheque.  The temptation is to spend this on niceties, and before you know it all the money is gone. Use some of your extra-large commission cheques to create something you will remember—a nice retirement, a comfortable home, or something else that you would like to save for. Use your savings to create a reward for yourself that will last.

  1. Tax Refund

If you get a tax refund, use the money to increase your savings. To find out how to pay less tax so that you can get a tax refund or qualify for a larger refund, speak with your tax advisor or someone you trust. Two ways that many people reduce the amount of tax that they have to pay is by contributing to an medical aid and retirement annuity.

  1. Review your debit payments

Take a look at the interest rates on any debt payments you may have. Regardless of how low your interest rate is on your line of credit, credit cards, mortgage or a loan, if you look around and see what other companies are offering for the same product you may find that you can do better. Make sure you’re getting the best rate possible.

  1. Track your spending and create a plan

Tracking your spending is the very best way to identify areas that you can save money. Written out in black and white, most people are surprised how much they spend and areas where they can cut back. All you need to do is track your spending for one month to get a good idea of where your money is going. Many people think, “Oh, I don’t need to do that. I already know where I spend my money.” The truth is surprising to most people; they really don’t realize how much they spend. You can’t say that you know how much you spend unless you have tracked your spending.

Once you’ve identified where you are spending your money, and you see areas where you would like to reduce your spending, you need to set an amount that you think is reasonable to spend and stick to it. To stick to your spending limits, you need to create a spending plan, and then follow your spending plan by only spending the amounts that you set out to spend in your plan. This is a very simple thing to do and it is a very effective method to control you spending. It is often called budgeting. To learn how to create your own spending plan, click here.


Carrie-Anne Diniz


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