Save Money

Johannesburg - In 2014 I travelled to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholders meeting. Thirty-nine thousand shareholders in Warren Buffett’s famous holding company travelled from around the world for a six-hour question and answer session with the 84-year-old Buffett and his 91-year-old business partner Charlie Munger.

Buffett has referred to the meeting as “Woodstock for Capitalists”. If you were attentive and took in every word, you would have heard all about the company in immense detail, with matters such as preferred annual returns, bolt-on acquisitions, return on investments etc.

Being slightly more of a layman, I preferred to listen out for the high-level wisdom that Buffett dispenses. He has a way of simplifying life and business down to common sense - Buffett famously only invests in businesses that he himself can understand.

I feel the same way. It is crucial to un-cloud complicated money matters and to look at things on a fundamental level. Most of us spend the majority of our lives working hard for our money, but how much time do we spend thinking philosophically and simply about the everyday ways in which we spend and hopefully invest it?

These are some of my basic money tips:

1. Pay your DStv account upfront for the year

This is my number one tip to anyone who asks me how to start saving money. It’s the best, guaranteed saving I’ve seen on a R9 000 upfront spend. If you’re saving money into any sort of risk-free investment, you should seriously consider holding back the first R9k and paying it over to our friends at MultiChoice at the beginning of each April. I’d look at this as if it were an investment.

Here’s why: as they do each year, DStv increased the cost of DStv premium (including access fee) from R740 per month to R780 per month from April 1. That’s an increase of R480 per year. However, if your account is paid upfront for the year before April 1, Multichoice will charge you last year’s price. What’s more, they will also only charge you for 11 months!

Let’s calculate the saving/return they’re offering you: (R480 + R740)/R9 360 = 13%. Obviously, if you kept the money in an interest-bearing account and let the balance diminish throughout the year you would earn interest, which is an opportunity cost to you.

But this is minimal compared to the 13% on offer. If you pay the R9k on your credit card, you could even roll the physical payment for another two months (at which point you would already have paid three months of subscriptions anyway), but we’ll get to that later.

2. Switching funds triggers CGT

This might not sound like something particularly important until it happens to you – and I’ve seen people hit by it twice this year already. When you move money between funds within an asset manager or a bank, capital gains tax is triggered. For example, you invested R500k in an equity fund 5 years ago. Your money is now worth R750k.

You decide that the market is a bit too volatile for your liking and you switch the money into a balanced or a stable fund. A capital gain of R250k is triggered and you will be required to pay tax of R33 825 [R250k x 41% (tax rate) x 33% (CGT inclusion rate)] if you are in the top tax bracket.

Of course, you will have to pay the CGT at some point in your life when you cash out the investment anyway. It just brings the cash flow forward. If you’re not expecting it, this can be a big hit for you. Make sure you double check the tax implications with the financial institution before doing something like this.

3. Tax-free savings accounts are a must

Tax-free savings accounts are a new savings product introduced in South Africa this year through government legislation. They allow you to save a maximum of R30 000 per year (and R500 000 in your lifetime) into a specially designated fund/account.

Often, these are the same funds that you may already be investing in (if so, you might as well change over by opening a tax-free version of that account). For anyone looking to save long term, these accounts are an absolute must-have because no tax or withholding tax is payable on your capital gain or on your dividends/interest earned.

In my opinion, it is ideal for younger investors to invest this R30 000 in high risk/high yielding funds as opposed to stable funds/fixed deposits. Firstly, the larger the gain you can potentially make, the higher your potential tax saving will be when you eventually cash out. This is different to a pension/retirement annuity where your main tax saving is on your upfront contribution.

Secondly, we all already receive an interest exemption annually, which should be exhausted on your more stable, interest bearing investments. The tax-free-savings account could then be used for dividend-yielding investments.

What is also important to note is that once you cash out your investment, your lifetime allowance into the savings account is depleted by the base value of the amount you cashed out. So it makes sense to let this money grow for as long as possible.

Lastly, if you have a family, I would consider investing the 30k per year for every family member on the first day of the year (giving your money as much time to compound as possible). Keep in mind that you are only allowed to donate a total of 100k per year to your children/spouse tax-free. So if you have more than three dependants, don’t forget about the donations tax implications.

4. Don’t keep idle money in your bank account

By far the most profitable type of deposit for a bank is what they term “idle deposits”. An idle deposit is money that an account holder leaves in their current account earning very little or no interest. The majority of that money is lent out as short-term loans and the bank makes a fortune on the difference between the interest charged and the interest it pays (or doesn’t pay). My bank account, for instance, earns the tidy sum of 0.2% interest on balances above R100k.

Many of us leave money lying around in current accounts earning nothing, while spending our time complaining about the 13c per litre increase in the petrol price. My suggestion would be to:

• Move the money in and out of your bond for short-term purposes (if you have a flexi-bond);
• Move the money into a money market account or seven-day call fixed deposit; • Use your credit card effectively (to be discussed later in the article); and • Apply for a Facility or a “One Account” (FNB).

The latter is a truly ingenious product offered by FNB. It turns your home loan into an overdraft on your current account. As an example, let’s say your home loan balance is R1m and your salary is R30k per month. Your salary is paid into your home loan, reducing the balance to R970k.

As you spend your salary throughout the month and your debit orders come off the account etc, the balance on the home loan increases again slowly back up to the R1m mark. In effect, you are saving say 8% to 10% interest on money that would have earned nothing until spent.

5. Saving into your bond

In November 2014, I wrote an article for Moneyweb about residential property investments. I received a lot of critical response for suggesting that saving into one’s bond/loan is a bad idea. Obviously, a lot depends on your personal financial circumstances. However, I still propose that paying off your home loan as quickly as possible does not always make financial sense. My reasons for this are twofold:

1. Interest rates have been extremely low for the last few years, to the point where it has been fairly easy to find an investment that will earn you a better return than the interest saving you can make by repaying capital on your loan. Perhaps this will not be as true going forward if interest rates increase sharply and the market pulls back somewhat.

Paying off other debt can also be a better investment than your bond. I recently met someone who was saving monthly into their bond even though they had a car loan and credit card debt – always remember to pay off your more expensive debt first. If you are more of a passive investor or you are very risk-averse, then saving into your bond is a better option than a money market account or a fixed deposit.

2. Interest paid on a loan for an investment property is fully tax deductible. If you are in the top tax bracket paying 41% on each rand of marginal income you earn, you will be entitled to a tax deduction of an effective 41% on each rand of interest paid. If your loan interest rate is 9.25% (prime), your effective cost of interest is actually only 5.45% (9.25*0.59).

Lastly, if you’re going to save into your bond, make sure that the bank does not capitalise that payment and that you have a flexi facility so that you can access it later on as a form of cheap finance for another property, a new car etc.

6. Understand how to use a credit card

A credit card can be your best friend if you know how to use it correctly. Of course, banks earn crazy amounts of interest from credit card users who don’t pay their balances on time each month. Here are some basic things many people don’t know about credit cards:

• The 55 days interest-free credit doesn’t necessarily start from the day you swipe your card. It starts the day after your statement date. Each day after that, you have 1 less day to pay back the money all the way down to 25 days. For example, if your statement date is the 13th of the month, you will have 55 interest free days if you swipe on the 14th and 54 days if you swipe on the 15th etc. If you swipe the day before your next statement date – on the 12th - you will only have 25 days to pay.

• If you do pay the “minimum repayment” (and not the full payment), you are charged interest. If you don’t pay the “minimum repayment” on the card, you are charged backdated interest from the day that you swiped the card (up to 55 days back)!

• The interest rate charged on your card is generally very high. Don’t fool yourself into thinking that this is a good way to borrow money.

If you manage your repayments properly (most banks allow for an automatic debit pull for the minimum amount due at 55 days), you can effectively roll your spend over for payment up to two months later. You should take advantage of this by investing the money that you would have spent in cash into short-erm investments to earn interest on the bank’s money.

7. Channel your spend to your credit card

I could write for a long time about credit card loyalty programmes – they’re somewhat of a passion of mine. I even tried to buy my car on my credit card. Programmes like eBucks (FNB), Greenbacks (Nedbank) etc can be lucrative ways to benefit from your existing monthly spend.

Depending on your rewards level, banks pay anything between 1% to 6% on everyday spend and I’ve seen up to 50% on fuel spend. There are certainly many hoops to jump through to get to the top loyalty earning bracket. However, at the least you should expect to earn 1% back on your credit card spend.

If you can channel an annual spend of for example R100k per year (R8.3k p/m) to your card, you could earn an extra R1 000 per year.

8. Medical savings account versus hospital plan

I’m going to write very generally here because I haven’t researched every medical aid scheme in South Africa. A medical savings account is a way for a medical aid to force you to save for day-to-day medical costs that the medical aid itself does not provide for in benefits.

In many cases, there is no difference in benefits between a hospital plan and a basic medical savings plan. The additional amount that you pay for the savings plan goes directly into your “savings account” until used.

For example, if a hospital plan costs R1 000 per month and a medical savings plan costs R1 500, the additional R500 x 12 months will be your savings for the year. This R6 000 is depleted as you use it throughout the year. If you don’t use it this year, it carries over to next year. If you leave the medical aid, they will pay the savings back to you. It’s your money. The medical aid just holds it for you – and pays you very little interest on the balance.

Obviously, if you happen to use up most of your savings in the first month or two of the year the medical aid is, in effect, giving you interest-free credit on the savings you’ve used but for which you have not yet paid (your break-even point here is 6 months).

But I suspect that this would not apply to the majority of members – otherwise the whole idea of medical aid would probably not work in the first place. If your savings are carried over for a second or third year, then there is a compounded lost opportunity cost to not investing the savings money yourself.

So if you have the self-control to save for day-to-day medical expenses and you are a fairly healthy person, a hospital plan could perhaps be better suited to you. NB: there are many schemes that do offer additional benefits on their savings option so you need to investigate this fully before making a decision.

Lastly, it’s important to note that if your company “contributes” a portion of your medical aid cost, it is often just a reallocation of your cost to company. Many people opt for more expensive medical schemes because they think their employer is paying more towards them.

In reality, the employer contribution is just an allocation and if you opted for the less expensive scheme, your take-home salary could be higher.

9. Tax benefits of pension funds and RAs

There’s a lot about pension funds that bugs me. They are one of the most fee intensive ways to invest your money. Most functions are generally outsourced to providers - from the admin to the investment decisions to the investments themselves.

In effect, this makes for a layered system in which everyone involved takes a cut in the form of a percentage of funds invested or a percentage of the return generated. Fees are charged all along the chain. On top of this, many pension funds are also mismanaged due to the disconnect between management and decisions made.

But you cannot avoid the massive benefits pension funds and retirement annuities (RAs) offer you from a tax perspective. Undoubtedly the biggest benefit is the full upfront tax deduction. This means that if you are paying tax at a 41% marginal rate, you will receive 41% of everything you contribute to your pension/RA in upfront cash from the South African Revenue Service (Sars)!

• If your pension is deducted monthly from your salary, the tax saving is embedded in your net salary received – the benefit to this is that your money has longer to compound in the fund, earning you tax-free gains. You also get an immediate tax benefit set off against your PAYE each month.

• If you contribute to the fund directly, you’ll receive the money back in the form of a refund when you submit your final tax return – the benefit here is that you can invest the money for the year yourself and make your contribution just before the end of the tax year.

I’ll let you decide which is preferable. But in effect, Sars is paying you to save money! Depending on how much your company is paying over for you already, you can also look at topping up your contribution to take advantage of the full deduction allowed (which is capped).

When you cash out (after the age of 55 aside for a few exceptions), you can only withdraw one-third of your funds as a lump sum and there is a partial tax exemption on this withdrawal. The remaining two-thirds must be paid as an annuity (fully taxed). So in reality, a portion of the upfront tax saving is recouped when you cash out, but there is still a major cash flow timing difference to take advantage of because you can invest the upfront tax saving elsewhere.

* This guest post is by Dean Gerber CA (SA), who works at VAT IT and is a residential property investor. He can be contacted on: gerberarticles@gmail.com.

Disclaimer: All letters and comments published in MyFin24 have been independently written by members of the Fin24 community. The views are therefore their own and do not necessarily represent those of Fin24.

at 05:59

Saving Tips from Old Mutual

Below are some practical tips on what you can do to start saving.

MAKE SAVINGS A PRIORITY

Your goal should be to save at least 10% of your pre-tax earnings. Consider paying yourself first by starting a regular savings plan that could form the backbone of a fund from which you will be able to draw money to cover the necessities of life.

Whether you are saving for a major purchase or for your retirement, you will never reach your goals unless you make savings a priority. Little changes can add up to big savings on expenses. Those savings can be put to good use for achieving your long term savings goals.

Are you a spender or a saver? Be honest with yourself and select investments that will provide you with the discipline you may need.

MAKE SAVINGS FUN

Turn savings into a game. Instead of force feeding budgeting tips to yourself, look at this as an adventure. Try to top your own savings each month or compete with a friend. Make savings a family affair – have a fun programme of savings for everyone to enjoy.

Consider having a kitchen jar to save money for a family holiday. You might want to give yourself pocket money allowance. The key is that your spending should not exceed your allowance. After the money is gone, its gone.

GETTING STARTED WITH A SAVINGS PLAN

Don’t neglect tomorrow due to extravagance today. If you need to start savings, start TODAY! Procrastination is enemy no 1.

Invest when the market is low, its sale time! Its important to invest for the long haul and be prepared to ride out the highs and lows.

It may help to draw up your bucket list and separate it into short, medium and long term goals. This will play a large part in selecting appropriate savings vehicles to achieve these goals.

CREATE A BUDGET

A great way to help save money is to create a budget, and then stick to it. Even by just tracking where the money is going, you will be more aware of your spending habits and eliminate unnecessary spending. One of the best ways to save money is to never see it. Set up direct debits and designate that some of your money goes directly into a savings account.

Keep a money jar that you can throw all your change into each night is a great way to save money. Plus, if you keep a note of how much you spend, you will be able to calculate how much your day-to-day living is costing you.

Avoid temptations such as special offers popping into your mailbox daily, unless it’s something you have been looking out for specifically.

BUDGET TOOL

SAVING FOR RETIREMENT

Retirement should not be regarded as a point in time but rather as a period over which transition is made from living off earnings to living off savings. When you cannot work in old age, your money will be working for you.

You must start early enough, and you must save enough. If you leave off starting to save for retirement from 30 years before to 10 years before, you will have to put away 10 times as much each month.

Take retirement savings seriously and do more than your parents and grandparents did.

RETIREMENT CALCULATOR

SAVING FOR EDUCATION

Savings funds can be set up long before it is known exactly where they will be needed. Save a bonus in an RA and each year after that top it up by the amount saved in tax from the previous year plus the amount by which the bonus for the current year exceeds the bonus from the previous year. Double up on money saved by your children to encourage them to develop a savings habit.

EDUCATION CALCULATOR

SAVE ON BANKING & INSURANCE

Reduce your banking costs

· Eliminate unnecessary fees.

· Avoid ATMs outside your network.

· Check with you bank to make sure you have the best type of account for your needs.

· Sign up for automatic bill paying to avoid late fees and tarnished credit.

· Move it out of sight. Getting money immediately withdrawn from you paycheck and put into savings is a great way to create a nice little nest egg.

Monitor your mortgage

Keeping on top of your mortgage situation can help you save big.

Review your Car Insurance each year

Always keep up to date on your car insurance – remember each year the value of your car will decrease so remember to amend the retail/ market value on your insurance to ensure you are paying the right premiums for your car insurance.

Regularly update your home and contents insurance

You don’t need to insure your house with your lender. Rather, shop around to find the best home building insurance deal you can get. Plus, update your household inventory for insurance purposes. Check on replacement costs and grade your household goods correctly to ensure you are not over insuring your household items.

Consider your health insurance options

Your health will directly impact the cost of life insurance and in some cases can reduce your health insurance and unforeseen or budgeted for bills if you get ill.

REDUCE HOUSEHOLD EXPENSES

Food shopping tips

· Stop buying processed food at the supermarket and make food from scratch. Go fresh food – pre-packaged food generally costs more and are not good for you.

· Buy only what you need in perishables – how many of us root through our veggie draw to find mouldy lettuce?

· Buy in bulk – single packs often cost nearly as much as multi-packs.

· Buy family pack items these often work out cheaper than smaller packages and can be divided and frozen for later use.

· Don’t let your eyes be bigger than your tummy. Buy only what you need for the week and avoid stocking up with food which could spoil quickly. If you run out of food mid-week its no big deal to make a second trip to the supermarket.

· Cook at home and bring your leftovers for lunch. Get into the habit of rustling up your own food and you can easily pocket half of that cash, using the other half to bulk buy your groceries at the supermarket.

· Plan your meals and take a list when shopping.

A guide to smart shopping

· Downgrade your brand purchases. Going for the cheapest is a bit over the top but how about dropping a brand level on everything you can and the overall price drops by roughly 30%. Often you are only paying for the branded packaging anyway.

· Give alternative gifts and remember, “it’s the thought that counts” – put that to the test by offering alternative gifts. Home make your presents, offer a service, - they’ll love your thoughtfulness and you get to pocket the cash you would have otherwise spent.

· Compare prices – shop around for the best prices.

· Familiarize yourself with seasonal sales. But, forbid yourself from buying things simply because they on sale. Regardless of bargain prices an extra expense is just that – yet another drain on your resources.

· Be a smart shopper by buying quality when it counts.

· Delay gratification – giving yourself more time to think about a purchase means you’ll make a more informed, less impetuous decision.

· Always shop with a list – it keeps you focused on what you really need.

· Discount shopping - some products are cheaper at certain times of the year. Follow the shops' sales cycles and use this to your advantage and build a shopping calendar.

Save on your electricity bill

· Electricity is a problem in South Africa and the cost keep soaring, so you have to do what you can to keep your electricity bill down.

· Switch off the TV when no one is watching.

· Turn off the lights when you are not using them.

· Buy energy efficient products/appliances (this also saves the environment).

· Unplug unused appliances – only have chargers plugged in when you are charging things.

· Wash your clothes in cold water, and limit the use of a tumble-dryer.

Reduce household expenses

· Maintain your home – taking good care of your house can save you lots of money.

· Watch less TV. Do you really need 300 channels? Going down a tier in your DSTV service can save you some cash too.

· Cell phone - change your cell phone package to suit your real needs.

CAR EXPENSES

Keep your tyres properly inflated – you’ll prolong their life as well as save on petrol. Regular maintenance of your car – like your home – will ensure it lasts longer. Make it part of your routine to check the car's oil, water and tyre pressure regularly. Live closer to work. It's better to pay more for the house, an appreciating asset, rather than on petrol and maintenance on the car.

at 05:54

20 Simple Tips by Brittney Castro

These days, in our world of instant gratification, it's more important than ever to be able to stay focused on saving money any way you can. So to help you monitor your spending habits and cut expenses, here are 20 easy ways you can save every day—starting right now. How's that for instant gratification?

1. Make a weekly "money date." Commit to sitting down with your money once a week for a money date. During this time, update your budget, review your accounts and track your progress against your financial goals. Like any relationship, if you want your financial life to improve, you must spend time with your money.

2. Plan out your meals for the week. Taking a few hours every weekend to grocery shop and meal plan for the week will definitely save you money, as dining out is the No. 1 expense for most households. By eating at home, you save money that would otherwise be spent on tax and tip—and you usually save calories, too.

3. Cut out cable. Gasp! Cut out TV?! Never! But with services like Hulu, Netflix and Amazon Prime, you can now watch your favorite TV shows and movies for a fraction of the cost of cable TV.

A study by market research firm NPD Group shows that cable bills will soon grow to an average of R123 per month, or R1,476 per year. By switching over to an online service or cutting out TV altogether, you can save that money for another financial goal—such as paying off debt, traveling or saving for a down payment on a home.

4. Switch to an exercise pass program. If you love working out, an exercise pass program such as Class Pass is the way to go. By paying a membership fee of R99 per month, you are welcome at many of the best studios in your area. And classes—like cycling, yoga, Pilates, barre, strength training, boot camp, dance and more—are unlimited. This beats having to pay for each studio's monthly membership or individual class fee, which can add up to hundreds of dollars a month.

5. Host a potluck. The more friends you have, the more money you spend on lunch dates, birthday parties and gifts. Switch it up and, instead of meeting over a fancy dinner, host a potluck and have everyone bring his or her favorite dish. That way, you can save money you'd spend on restaurant extras, such as tax, tip and parking—and you'll usually have a more intimate meal together, too.

6. Leverage lodging rental websites. Finding a place to stay while traveling is so convenient when you use a lodging rental website such as Airbnb, Travelmob or Housetrip. You can often find a place that has a kitchen (so you can cook meals at home to save money) at a rate that's comparable to hotels. You can even rent out your own place on sites such as Airbnb while you travel to make some extra cash to pay for your own travel expenses. It's a win-win scenario.

7. Make coffee at home. This one's not my favorite, as I absolutely love going to coffee shops and drinking delicious organic coffee. However, spending R4 to R5 on coffee every day definitely adds up. So try my approach and allow yourself a few days a week to buy coffee at cafés, and make it at home the rest of the time.

8. Work more. When you're working a lot, there's not much time left to shop and spend money. So stay busy and pursue a career you love.

9. Wait 48 hours before you click "buy." Since we can have anything we want these days with just the click of a button (there's that instant gratification again), you need to find a system to help buffer your impulse purchases.

Example: Wait 48 hours before spending money on things that cost more than a certain amount. When you do, you will find that, most of the time, the item was more of a "want" than a "need." Plus, you'll save money and work toward being more mindful with your spending.

10. Use blogs and Pinterest to learn DIY beauty treatments. Self-care is important—but going to spas and getting pedicures, massages, etc., can really add up. Allow yourself a certain amount to spend on these things; then use blogs and apps like Pinterest to find at-home beauty treatments to help you save money. Often you can find a DIY organic option using common household or kitchen products.

11. Outsource online. Time is a commodity, and your time is precious and valuable. And these days, there are so many tasks you can outsource that will save you time and money. But how do you figure out if outsourcing something is worth the expense?

A great thing to do is to actually calculate the cost of your time, which will help you figure out if you can pay someone to do something for less than your hourly rate. Here's an example: A monthly net income of R3,000 divided by a total of 160 hours worked equals an hourly rate of R16.75. Now that you know the value of your time, you can strategically outsource it using a service like Fiverr or Task Rabbit for a fraction of your own hourly rate.

12. Get creative with gifts. Find creative ways to express your love to friends and family members with free, lower-cost or handmade birthday and holiday gifts. After all, a handwritten note explaining why you love someone can be more sentimental than some expensive gift he or she may never even use. Most people will appreciate the thought behind your gifts more than anything, so don't be afraid to save money and find free ways to celebrate birthdays and holidays.

13. Choose quality over quantity. This can apply to food, clothes, electronics and much more. Although it's tempting to choose the more budget-friendly version of an item, sometimes choosing quality over quantity will save you more in the long run. Save up your money and get the best-quality product you can afford, and leverage the cost-per-wear philosophy with more expensive clothing and shoes.

This applies to food, too: Buying quality organic food can nourish you in ways that fill you up more than the prepackaged, processed stuff and potentially save you money on health-care expenses in the future, since you're taking good care of yourself. Find a balance that is right for you and choose quality whenever you can.

14. Deal with your emotions. Excessive spending is often a way to avoid feeling certain emotions. If you check in with yourself before you go on a major spending spree, you may be able to identify if you're feeling bored, lonely or stressed and are therefore spending money as a means to avoid the underlying emotion. Check in with yourself before you buy, and be mindful with your spending.

15. Stop trying to keep up with the Kardashians. It's hard to keep your blinders on and not compare your financial life to that of others, especially celebrities. However, it is really important to be clear about what matters most to you and make sure you build a financial plan that supports that vision. This will keep you moving toward your financial goals and stop you from spending money on things you don't need, to impress people you don't like.

16. Read a personal finance book. When you learn about personal finance, you'll learn even more strategies to help you save money for your goals in life. Knowledge is power, and the more you know, the more you can save.

17. Balance your "FOMO/YOLO" mind-set. With social media controlling our lives like never before, people often fall victim to the "fear of missing out" phenomenon and instead go overboard with a "you only live once" mentality.

While it is important to live in the present and soak up each precious moment of life, make sure you balance that out by saving for your financial future, too. Without checks and balances in place, you can find yourself saying yes to everything and spending more money than you have—all due to the fear of missing out.

18. Map out your financial goals. Be very specific with your financial goals. For example, saying, "I want to save for a home down payment" is not enough. You need to map out how much you need, by when and what you need to save every month in order to reach the goal. When you know what your targets are, you're more likely to stay the course and continue saving for them for the long term.

19. Keep your eye on the prize. Staying focused on your goals takes discipline and determination. Saving can be easy and exciting at first, but after a while you may lose that initial motivation and start to find other things you can spend that money on. To avoid veering off course, check in with your goals regularly and keep your eye on the prize.

"The truth is, there are many ways to save money. Find the ways that work for you, and slowly start incorporating the strategies into your life."

20. Track your progress. South Africans save only 5.5 percent of their money compared to the 20 percent that personal finance indicates you should put away. But instead of feeling ashamed about your lack of savings, just start by saving something.

Even 1 percent is better than nothing. Track your progress and continue to increase the number year after year. Step by step, day by day, you can get to that 20 percent savings level.

The truth is, there are many ways to save money. Find the ways that work for you, and slowly start incorporating the strategies into your life.

—By Brittney Castro, founder and CEO of Financially Wise Women.

Some More Tips