Are these attitudes or habits stopping you from saving?

Saving is an important aspect of personal finance, but South Africans are not doing it enough. According to Trading Economics, the South African household savings rate has dropped to 0.30%, which means we are putting away less than 1% of our income for a rainy day or retirement.

In contrast, countries like China have a culture of saving, with households saving almost half of their income. So, why are South Africans not saving? Could it be that our mindsets are not aligned with our financial goals? In this blog, we look at the top five attitudes preventing you from saving successfully.

  1. Saving is not valuable

Many people underestimate the value of saving and believe they cannot afford to save. However, having a savings plan and building an emergency fund is crucial for personal financial freedom. We all have monthly expenses that we might deem more important than saving, but consider the following:

Savings + Growth generated = Building blocks of financial independence

When done in the right way, these building blocks can become property, education, travel, and healthcare. Saving is a sacrifice, in the same way exercising and eating healthy is a sacrifice. It might not be nice in the moment, but as time passes, you will be very glad you made the sacrifice. Saving makes you financially fit, which means less stress and anxiety and a happier life.

  1. Professional financial advice is for the birds

Many people prefer a DIY approach to financial planning. Others follow trends or advice from friends and family. However, this is not the best approach. Financial planning is complex, partly because each person’s financial situation is unique.

Using an authorised and registered financial adviser is like going to a qualified doctor when you’re sick, not asking Doctor Google what’s wrong. A good adviser takes a holistic view of your personal finances and coaches you to get financially fit. They are there to support you on your journey and help you avoid costly mistakes.

  1. Debt is my friend

Did you know? South Africans are among the most indebted consumers worldwide! And while some debt might be necessary, like your bond or vehicle finance, using credit to pay for a lifestyle you cannot afford drains your income and negatively affects your financial health.

Keep in mind that when you pay for something on credit, you can spend two or sometimes three times the actual cost. Saving also becomes futile if you use it to pay off debt every month instead of growing your wealth. So, go ahead and cut those credit cards!

  1. Trend investments = Big bucks

FOMO (the fear of missing out) makes people do crazy things. When the markets go up, they’re in, and when the markets go down, they sell out, destroying their savings in the process. Some investors have suffered massive losses because they invested in trends like cryptocurrencies, NFTs, forex, or unregistered assets.

These trend investments promise high returns, often much higher than what banks or investment providers offer, but they are also high risk. Therefore, it’s important to do your research, invest wisely, and fight that FOMO!

  1. I’ll start saving when I’m older

Saving and investing is a long-term game, and you need time to grow your money. The more time you can give your investments and money, the better. Compound interest is a powerful tool that can significantly grow your savings over time. For example, saving R500 per month for 10 years at a growth rate of 10% per year will grow to R103 276 and R208 962 in 15 years. That’s magic!

But remember, no market condition is permanent, and most investments recover after the markets go down. Selling when the market is down means you won’t benefit when the market recovers. And the same applies to your savings.

Saving is essential to personal finance, but certain attitudes can prevent you from saving successfully. By changing these negative attitudes, you can achieve personal financial freedom and confidently face your future. Time and consistency are your allies when it comes to saving, so use them wisely!

mCubed Group is an Independent Fund Administrator that can help advise you on the best ways to grow your savings and invest in a comfortable future retirement. Members, clients, and participating employers of our retirement funds enjoy access to the best investment administration and advice, excellent service, and complete transparency for the best long-term results. Our fund-appointed FAIS-accredited financial advisors also help you to enjoy a safe, financially sound, stress-free, and prosperous retirement. Get in touch today to reach your retirement goals!