Just when we all got used to the petrol price coming down, it starts rising again. And the price of electricity is set to increase, too. Trying to balance the household budget and personal finances can be frustrating and tricky. And the bleak economic outlook – which should encourage all of us to make smarter financial decisions – doesn’t help. Fortunately there are some simple and highly effective ways to reduce your expenses and maximise your savings.
Budget, budget, budget
I cannot say this often enough. Planning is vital for any project or venture to succeed because it ensures that all the requirements are satisfied and that deadlines are met. Similarly, your finances need a plan and this is called a budget. It shows you how much you earn, how much money you need to settle your bills and how much money you have left until payday.
A budget is a great way to guide your spending and if you do not have one, you risk overspending. This can place tremendous pressure on individuals. To rectify this, you need to make sacrifices and reduce spending in other areas or find additional income to meet your financial obligations. Budgeting is simple and most banks offer free budget planners. Be financially responsible, take the lead, and discuss a household budget with your family.
Choose the right bank
Relationships are important and that includes your relationship with your bank. Day-to-day banking – daily transactions, saving and lending – is a long-term commitment. For this reason it is vital that you make the right decision when choosing a bank. You want to pay the lowest transaction fees and earn the highest interest. If you spend less you will save more. It doesn’t get any simpler. Choose a bank that suits your needs and is easily accessible with high levels of personal service.
Pay lower bank fees
Do you know how much you spend on bank fees? Check your statements. Banking costs South Africans a small fortune each year, so make sure you get the best deal and do not pay more than you have to. Shop around and visit all the banks one Saturday morning. You will be surprised at the differences in bank fees. If you cannot get to the branches, visit their websites or contact their call centres for further information.
Look for a bank with an account that suits your individual needs. Some products offer loads of features and benefits and appear to be fantastic, but do you really need them? Remember that you pay for all the bells and whistles, so ensure you pay only for products and services that you use.
Freedom to choose
Consumers regard banks as a one-stop finance shop, meaning that they can access various products and services at one branch. This may be true, but it certainly needn’t be the rule. Did you know that you can open a personal transaction/current account at Bank A, apply for a bond with Bank B, take a personal loan from Bank C and choose Bank D for vehicle finance? You can pick and choose authorised financial services and registered credit providers according to your needs. This means that you are well within your rights to bank with one institution and have a bond elsewhere. Adopting this attitude will allow you to be more selective and reap the benefits.
Swipe your debit card
Times may have changed but cash is still king and in some cases you can even negotiate a cash discount. Nowadays, thanks to innovative technology, consumers can make cashless debit card purchases at most stores instead of paying cash. Banks encourage debit card usage because it offers convenience in a fast-paced society in which we do not always have time to hunt for an ATM. Paying by debit card is also a safer alternative to drawing and carrying cash, with many banks charging less for a debit card transaction than an ATM withdrawal. In fact, one bank charges no fee for debit card transactions.
There are many other ways to save, ranging from lift clubs, energy-efficient electrical appliances and light bulbs to cooking meals using raw ingredients instead of eating readymade dishes. No matter where you start saving or what measures you take to reduce your expenses, it has to start somewhere. Start with the easy ones mentioned in this month’s column. This can make it easier to form a cost-saving habit and develop a healthy attitude towards your personal finances. At times you may question whether you are making progress but rest assured you are. It all adds up, so get pennywise today and be patient.
Jason St Leger Seaton works for Capitec