The month of July is Savings Month in South Africa, a campaign led by the South African Savings Institute (Sasi), with a focus on driving awareness around savings issues that contribute to the financial wellbeing of the South African consumer. In the quest to find alternative financial solutions for South Africa’s dire savings rate, this year the spotlight falls on how employers can play a vital role in assisting cash-strapped consumers to save.
The 2018 Sasi July Savings Month Community Campaign will take the savings campaign to grassroot communities, stokvels and tertiary institutions. Sasi will hold workshops during July in various communities and at institutions of higher learning.
HR professionals should be educating employees to start building a savings buffer and recommending tweaks such as regularly reviewing and adjusting their pension fund contributions.
Employers can more actively facilitate or automate the savings process for those with an income, such as putting savings into tax free savings accounts, and structuring 13th cheques as a savings tool, according to Sasi chief executive Gerald Mwandiambira.
Tips from Sasi to help you save
Saving is not only dependent on income, it is largely dependent on willpower and discipline.
These solutions assist savers to have willpower and discipline:
1. Set a Target: The reason why many of us do not save is because we do not have set targets. It is important to sit and write down important savings targets such as an Emergency Fund, Holiday Fund and other targeted savings. Do you know your targets?
2. Automated Savings: Debit orders to savings accounts allow automated saving. You can set up debit orders, tax free savings accounts (TFSAs), 32-day notice accounts and unit trust accounts.
3. 13th Cheque: Ask your employer payroll to save for a 13th cheque paid to you in December by lowering your salary. This extra pay cheque will allow you to ride out the festive period and New Year expenses without major impact on your finances.
4. Pension Fund Contributions: When starting a new job, ask your employer to default to the highest allowable retirement fund contribution percentage of your income. You can also ask your employer to review your current contribution. Best of all, all retirement funding contributions are tax deductible annually up to R350 000.
5. Financial Wellness Days: Ask your employer to give mandatory time off to review your finances with a financial planner once a year. Regular meetings with a certified financial planning professional will help you remain in control of your finances.
6. Group Savings: Start or join a stokvel or investment club with family and friends. The group will encourage you and allow you to develop the discipline required to be a regular saver.
7. Children: Open TFSAs for all your children to maximise the benefit they receive from these accounts. Set up debit orders to contribute to these accounts as they grow up, together with cash gifts they receive on birthdays, etcetera. You can encourage grandparents and other family members to also contribute regularly.
8. Domestic Help: Set up a savings account or retirement annuity for your domestic worker. These important members of our families are often forgotten in future planning.
9. Retirement Fund Statement: By receiving your retirement fund statements monthly or quarterly, you will be encouraged to keep track of your savings to ensure that you have sufficient income when you retire.