How to save during a recession

 

On the back of National Savings Month in South Africa, a recent report from the World Economic Forum (WEF) highlights the startling gaps between financial needs in retirement and what consumers are actually saving.

According to the WEF, the global gap in retirement savings is estimated to be $400 trillion by 2050. While the WEF report is a global report, South Africa faces similar issues. Craig Sher, head of research and development at Discovery Invest, points out that life expectancies are on the increase and so too, is the gap between what you need to save for your retirement and what you are actually saving currently.

The harsh reality is that savings are a key cog in the economic wheel. Although saving plays an important role for an individual who is trying to achieve financial goals, it also ties into the health of the national economy. The national savings rate includes individual savings as well as corporate savings and public sector saving. When the public sector has succeeded in saving money, this is also known as a government budget surplus. Unfortunately, South Africa is currently running a budget deficit, which means that the government expenditure is more than its income. This is why it is so important to encourage and foster a savings culture among South Africans.

 So, how can consumers save money during a recession when they are already being forced to count every penny simply to make ends meet? Besides taking into account the knock-on effect of their individual money personality, here are some quick and easy tips for consumers to use:  

Property and home

  • If you are close to the end of a rental lease, think about moving to an area with lower rentals. Consider moving in with family or friends if you are single.
  • Check if your lease allows you to sub-let. You can get a flat mate to share the rent.
  • If you are a homeowner, you can rent out an extra room in your house. Airbnb is a quick, easy way to do this.
  • Sell your home. If you are paying for a house you truly cannot afford, this is the last resort. You should consider selling your home before your bond repayments go into default.
  • If you need to replace your washing machine get a front-loader that will save you up to 50% on electricity costs as well as save water.

Transport

  • Use public transport. Access the Gautrain, the MyCiti and Mynah buses for safe transport to and from work to reduce your petrol costs.

Health

  • The average smoker buys five packs a week at about R35 each. That works out to R9 100 a year! Kick the habit, save money and improve your health.
  • If you have been smoke-free for at least a year, you can also ask your life assurer to review your insurance premiums on the basis of improved health risk.
  • Insist on generic medicines when you go to the pharmacy. This does not mean that the medication is of lower quality, it is simply a brand name difference. It will, however, make a difference to your wallet.

Investments

  • Look for providers that can help you save fees on your investments. At Discovery Invest, you can reduce the admin fees on your retirement savings to zero or you can get up to 15% extra for your retirement.

Sources: World Economic Forum report

Nothing contained herein should be construed as financial advice and is meant for information purposes only.

Discovery Life Investment Services Pty (Ltd), branded as Discovery Invest, is an authorised financial services provider. Registration number 2007/005969/07.

 

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