10 Ways to get your bank account in shape for summer
Last updated on 28th February, 2019 at 09:35 am
Summer is around the corner… meaning plenty of fun ways to spend more cash – whether it’s for December holidays, gifting, celebrating the end of the year or more. All the help your bank account needs before summer hits is here! Plus – win R10 000 to invest – the perfect way to kick off summer. Scroll down for more.
1 Start tracking your spending
“If you know where your money is going, it will be easier to make changes and cut down on spending where you need to,” advises Jaco van Schalkwyk, a certified financial planner and professional at Sanlam’s Plan-B BlueStar. “You’d be surprised to see that money often flows to places that do not match your priorities and needs.”
So if summer parties or loads of family gifts are a priority, track where you’re currently spending and understand where you can cut back to divert funds to the things that matter most to you.
2 Separate ‘wants’ from ‘needs’
“When money is tight – which can be worsened around holiday season – it should not be spent unless absolutely necessary,” says van Schalkwyk. “This belt-tightening is only temporary if you follow a simple strategy: ratio 4:1. Save R4 for every R1 you intend to spend on ‘wants’.”
Battling? For upcoming summer months that you know will be particularly high-spend, make a list of your needs – things you have to spend on. Then next to this, list your wants – things you’d love to do or buy, but which could be cut if absolutely necessary. The needs list is your priority; now order your wants list in order of priority, and only spend on these as and when you have the funds. ‘Want’ items should ideally not be bought on credit, and shouldn’t compromise your regular savings.
3 Avoid using credit to pay your bills
“While it may make things easier now, using credit only increases your future monthly payments,” warns van Schalkwyk. “You will simply be digging a hole for yourself by borrowing money at interest rates of 20% or more.”
Be honest and realistic about what is causing you to consider using credit to pay for things like bills. Getting your bank account in shape – and keeping it in shape – means weaning yourself off of credit as a regular payment method. This typically happens by cutting back on luxury spending, for example of entertainment, holidays, clothes etc.
4 Set up your savings
Says van Schalkwyk: “By assessing your expenses, you can ensure that you spend less than your income. Your goal should be to have at least some of your previous month’s pay cheque left in your account when your next pay cheque is deposited into your account. Then set up direct transfers or debit orders into investments, covering short-, medium- and long-term plans.”
If you set up debit orders that come off directly after pay day for savings, you won’t be able to spend the money – even if you want to! And over time, you’ll learn not to miss that cash, too. Speak to your financial adviser about your savings goals – but the sooner you set this up, the healthier your finances will be – regardless of the season!
5 Then review those savings!
That includes reviewing things like your insurance, too. “Regular check-ins and reviews with your financial planner ensures that you have the best premiums for your circumstances,” suggests van Schalkwyk
The more regularly you check in with the experts handling your savings and investments, the more likely you’ll be ensuring your money is working hard for you – and that you’re taking advantage of the best options and deals available.
6 Avoid summer’s splurge temptation
Holidays and sunshine bring occasion spending that can escalate. “For occasional things like gifts and holidays, stick to the 4:1 ratio mentioned in point two (above) and only make a purchase after achieving your investment goals to ensure that you make sound, rather than impulsive decisions,” advises van Schalkwyk.
Planning is key – don’t go shopping without a clear idea of your budget, and drawing a distinction between those ‘needs’ and ‘wants’.
7 Cut back where summer makes it easy to
For example: are you away for long portions of summer? Maybe this is a good opportunity to downgrade TV and mobile services as your usage won’t necessarily match how much they’re costing you. “Other options include: if you have a cell phone, consider cutting your land line. When you qualify for a cell phone contract upgrade after 24 months, rather continue using the current one and so reduce your monthly subscription,” suggests van Schalkwyk.
8 Save on electricity
As you head into summer, it’s easier to be aware of your electricity consumption and make savings. “By turning off appliances and lights when they are not needed, you can save substantially on your utility bill. Purchase energy-efficient light bulbs, use a fan instead of air conditioning or wear a sweater instead of turning on the heat,” says van Schalkwyk.
9 Cut out take-outs
“Even if the meal is not expensive, doing it too frequently can quickly add up,” says van Schalkwyk. So if you’ve got grand plans for an amazing family celebration around the new year, help fund this by cutting back on takeaways, fast food and eating out in the months beforehand. You’ll be amazed how much you’ll save!
10 Give meaning to your money
Many of us are in a position to use our money for good, and heading into summer and the season of giving is a great opportunity to assess this. “Aim to support one or two charities to improve the lives of disadvantaged South Africans,” suggests van Schalkwyk. It won’t save you money – but it’ll add soul, conscience and meaning to your bank balance, and that’s priceless!
Want to save money and stand to win R10 000 to invest?
If you sign up to a Smart Invest savings product before 31 October 2018, we’ll guarantee to top up your investment by R250.
Plus, you could win a R10 000 investment top up – a big help towards your saving goals! T&Cs apply.
And, as a Sanlam Reality member, you could get as much as 100% off on your primary asset management fees – another huge saving for your pocket.
Find out more about Smart Invest and our savings competition.
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