July is national savings month. So be sure to be alert when it comes to your finances. Have you ever asked yourself how much you really know about your bank and the benefits it has to offer? According to the South African Reserve Bank statistics show that 16 million South Africans have savings accounts, but they are emptier than they should be. About 40% of this money sits in accounts that offer very low interest rates, if any interest at all.
Know Your Interest Rates
Your hard earned money is your pride, therefore you want to make sure you get good interest rates from your banker as this is a savvy way to ensure that your money grows. Head of product and customer value proposition at African Bank, Neil Thompson, says it’s time we as South African citizens start become savings savvy. We have been spoilt for choice this year with the introduction of a deluge of new banking options, all promising great deals and better prices. “This is great news for consumers who now have an opportunity to grow their wealth faster by just switching to an account with the best savings account interest rates and one with lower monthly fees.”
Double Up Your Wealth
How will you attain wealth through ignorance? It’s your right to look at and compare a variety of options available to double up your money. Warren Kopelowitz, CEO at My Treasury, an independent personal finance comparison website that helps South Africans compare savings options online, agrees by saying that efficient saving can make a huge difference to your wealth. “Moving your cash from a call account that offers returns of 3% to a long-term fixed deposit with an interest rate of 10%, for example, would effectively double your wealth over ten years.”
Move Your Money To Get A Return
Savings and investment accounts are great ways to encourage smarter wealth management. With July being National Savings Month, Thompson urges everyone to move their money if they are not getting a return. “Don’t keep your money in a low or no interest-earning bank account when the market is opening up and offering so much more. Start using your account as a tool to generate income.”
Here Are Some Smart Savings Tips
Check the savings rates that are being offered in your accounts carefully
Banks may offer similar rates, but you need to check the balance you would need to qualify for the rate. Lazy money, or deposits that sit in current or savings accounts earning very little interest, doesn’t make any sense. Grow your money by banking smart. For example, African Bank’s day-to-day banking product called MyWORLD offers the best savings rate of 5, 5% on any positive balance in the MyWORLD account or Power Pocket account. MyWORLD also offers best savings rate of 6.5% on any positive balance in a Savings Pocket account, linked to your MyWORLD account, with real time access to your savings.
Don’t get caught off guard by high banking fees
You should compare apples with apples and see which bank offers you the most value. Find a bank that banks the family, not just the individual and save on monthly account fees and bank with SA’s lowest banking fees.
Apply for a debt consolidation loan
Debt consolidation loans are a great way to settle outstanding loan payments into one account at a rate that is affordable for you. This then allows you to continue saving without having the “leaky bucket” effect.
Invest your savings
Although you need a monthly savings plan, saving money is not always enough. If you’re saving for a long-term goal, open a notice deposit or tax-free account which allows you to add money monthly while your investment matures. A notice account is ideal if you’d like to be strict on your savings as you cannot withdraw money before the notice period you choose or save for a 12 month goal using a tax-free account which will pay out on the 12 month anniversary of the account.
Use a financial advisor or visit a branch
The complexity of savings products and different interest rate structures and calculations can make it difficult to accurately compare products. In order to save and invest wisely it is often prudent to seek the advice of a qualified advisor.
Learn how to budget
It is vital and probably the best way to save money. Learning how to budget could ensure that you don’t spend money carelessly and keep account of every penny you use. That way, your bank balance will rarely suffer from those midmonth woes. The MMI Unisa Consumer Financial Vulnerability Index (CFVI) study, which has shown that the people who feel most vulnerable financially are those who don’t budget and have a financial plan. “The important thing to remember is that it is never too late to start, never too late to teach your children and never too late to switch to a better option,” he concludes.
Compiled by Naidy Tembane