7 Ways to Save Money at Early Age
Some people will say that you should save now and reap its rewards later; others have a grimmer warning saying how you’ll regret things if you don’t start saving money for the future.
But do you have to save now when you can just do it later? Life is too short to think about unpredictable things in the future. Although there may be truth to this viewpoint, there are far greater advantages to saving money at a young age than procrastinating and doing it later.
Why Save Money Now?
Why save now when you can do it tomorrow or the day after, right? You’re young and you should enjoy life. It’s natural to buy things you like, go out and splurge on food, or take an out-of-town trip whenever possible.
These are the activities that often come to mind, especially if you’ve just gotten your first job. After all, you’re spending your hard-earned money and you deserve to enjoy every cent of it.
But doing these without thinking about what may happen in the future can put you in a pinch. When the time comes that you need money for an emergency, you may not have enough in your account to pay for it. The same goes for bigger purchases in the coming years like a vehicle or a house.
Regardless of your current situation, the importance of saving money for the future doesn’t change. Starting to save money early on gives you the following advantages:
– More retirement money
– Bigger purchasing power for large purchases
– Extra cash for emergencies
– Lesser need to take a loan
– Greater discipline in handling money
If these things make sense to you, the next thing you should seek are the ways to save money right now.
Ways to Save Money at Early Age
Here are some of the actions you can do to save more money while you’re still young.
You can go to the nearest bank and open an ordinary savings account, but it’ll take longer for you to compound your money due to taxes and other banking fees involved.
The better option is to open a tax-free savings account (TFSA) with your favorite bank. A TFSA is a type of non-retirement savings that grants tax-free advantages on interest income, dividends, and capital gains. Here is a list of the best tax-free savings account available in South Africa you can look for!
You can save up to R30 000 per year on the TFSA, and up to a lifetime limit of R500 000. It might be hard to maximize the annual limit, especially if you’re just a student or you’ve just started on a job. However, it’s highly recommended that you deposit as much as you can into the account for at least 16 years to fully utilize its benefits.
We hope you’re not underestimating the tax-saving feature of TFSAs. Thinking that since it’s just a small percentage of tax that’s eliminated, it won’t matter much in saving money for the future.
Well, sad to say that you’re wrong.
For example, let’s say you’re 25 years old now. If you put in R30 000 in a normal interest-earning savings account, you’ll have around R1.5 million by 65 years old after taxes are applied.
However, if you would’ve put the same amount in a TFSA, you’ll have R2.7 million by the time you retire. Amazing, right? This is the power of compounding and the tax-free feature of a TFSA.
- Track Your Expenses
We know it’s a pain to write or journal your expenses every day. Who would want to record every rand and cent they spend, right?
However, keeping a record of your purchases, no matter how small or big they are, will go a long way in your quest toward saving money for the future.
With a ledger of your expenses, you can track your spending habits and see where you’re putting your money the most. From there, you can slowly minimize or eliminate unnecessary spending and focus more on saving.
When recording your expenses, put a date on every entry you write. Put columns like income and expenses to get a better view of the money coming in and out of your pocket.
Small notes on why you made the purchase will also help. Once you review your notes later, you’ll realize the importance of saving money and how silly the things you spent on were.
- Spend Money Wisely
No matter how big your income or current savings is, it will be gone in an instant if you don’t properly manage it.
Fully understanding the importance of saving money doesn’t end with just putting more cash into your account. It must be practiced with proper financial management so that the savings will last for a long time.
To practice spending money wisely, consistently do the following things:
– Budget your weekly or monthly expenses
– Prioritize needs over wants
– Share costs with friends or family members
– Use discount coupons as much as possible
– Allocate a certain amount for savings the moment you receive your salary
By doing these things regularly, you’ll make it a habit that will last a lifetime. Little by little, you’ll also see your account grow larger than when you used to spend money needlessly.
You’re probably one of the many young people in South Africa burdened by student debts. Although a student loan generally has lower interest rates than other loans, it’s still challenging to deal with the fact that you already have a debt to repay early in your life.
To maximize your efforts of saving money for the future, it’s best to repay your student loans as quickly as possible. This will help avoid the piling interests that can suck your savings dry. Once you’ve removed the debt obligation from your mind, you can focus back on increasing your bank account.
Don’t ignore your debts and just wish that they’ll go away. Otherwise, you’ll regret it because lenders will haunt you like a bad nightmare, and this can affect your financial options in the future.
If you’re having trouble repaying your debt, speak up and talk about this with your lender. They’ll be open to give guidance or find ways to make monthly repayments easier.
Knowing the importance of saving money, you should understand that you should keep debts to a minimum. Avoid getting a loan as much as possible, especially when you’re still young. As for credit cards, you must be smart enough to use them sparingly.
Instead of collecting debts, focus on increasing your income, and growing your bank account. Don’t forget to slowly build your credit score at the same time so that you’ll have better financial choices in the future.
- Get a Side Hustle
Saving money for the future while you’re still young is very challenging if you don’t have an income to depend on. But even if you’re a student, you can work on side jobs that will increase the amount you can put into your savings.
Here are some ideas that you can consider as a side hustle:
– Sell artwork and crafts
– Grow indigenous plants and sell them
– Apply as a virtual English teacher
– Tutor younger students
– Take on odd jobs like walking dogs, becoming a mystery shopper, or being a butler
– Sell SA memorabilia
– Plan SA holiday packages for tourists
– Sell food at food markets
– Rent out extra spaces
There are a lot of part-time jobs that you can take on in SA. Look for postings online and don’t shy away from the challenges that you may encounter.
Once you experience how hard it is to earn cash, you’ll deeply understand the importance of saving money and why it’s best to start early.
- Use Student Benefits
Banks often offer special student accounts that feature data plans, food vouchers, travel vouchers, reduced ticket prices, and discounted memberships to certain establishments. You also get lower fees, free card swipes, and free cash deposits.
To qualify for a student account, you must sign-up with your preferred bank and meet the initial criteria. Grab this opportunity while you’re still within the allowable age range.
- Sign-up for Freebies
Mobile apps like The Entertainer can be a good investment if you want to get freebies at a minimum cost. Deals like free drinks, buy-one-take-one offers, and discounted accommodations are some of the great things you can get from freebie apps.
Use the app together with your friends to further reduce your expenses.
You should realize and understand the importance of saving money at an early age to avoid mistakes that can be the cause of financial ruin. Saving money for the future will work best if you can increase your cash input and reduce expenses simultaneously.
We’re not suggesting that you should stop enjoying your hard-earned money. Rewarding yourself will keep you sane and help you realize what money can do.
What we recommend is to keep your expenses in check and always think about smarter ways of spending money. We hope the tips we’ve provided will help build your financial habits and help open better fiscal opportunities in the future.
MoneyToday South Africa is a financial website aims to assist consumers with comprehensive information on personal finance, loans, insurance, investment opportunities, financial guides, tips and comparison of a large number of finance and insurance companies on the South African market.