Being Smart with Your Money Can Create Wealth
"Saving is not an easy task for most persons, especially within the context of difficult economic times," says Aneika Vassell, financial empowerment specialist.
"However, saving is something everyone should strive to achieve to become financially independent," the project officer for the JN Foundation's Financial Empowerment Programme adds, "And, there are ways to save, even when you are faced with difficult financial circumstances.
Pay yourself first
"You ought to consider your savings as payment to yourself," Vassell advises. "Pay yourself first; and then use the remainder of your salary to take care of all your other budgeted expenses."
She indicated that it would be prudent to set up a direct transfer to an account to which your access is limited, and have your money directly transferred to that account. If you receive your pay in hand, take your savings to the bank for deposit.
"Although this requires tremendous discipline, keep your financial goals in mind and let them be your motivation," she says. And she further explained: "In these times, you don't have to join a long line to do that, because most banks have ATMs to which you can deposit the cash and updates your account instantly. You can budget how you spend the remainder," she pointed out.
How much one saves is dependent on one's personal financial goals, Vassell notes.
"Determine your financial goals, whether it is to purchase a car; take out a mortgage; plan your family vacation; further your education; or save for retirement. It is important to set goals and work towards them," Vassell counsels.
"Create a spending plan. This will assist you to determine how much you need to spend on items such as meals, housing and transportation," she says. "And make it a habit."
Save for your retirement
"To remain financially independent, even after retiring, means that you need to save for your retirement as soon as you start working," Vassell advises, noting that it is extremely important.
"Join an approved pension scheme in which you can save from five to 20 per cent of your income. However, it is important to know how much income you will need to maintain your lifestyle after retirement. Therefore, talk with a pension adviser who will give you a better understanding about the amount you will need to put aside, as well as how you can diversify your pension portfolio," she says.
... Unwise to borrow more than you can afford to repay
ANEIKA Vassell says that although one may budget and spend wisely, what one saves may not be adequate to meet one's financial goal in a timely manner. She advises that borrowing may be a short-term way of achieving that goal, but borrowing should be done prudently. Careful analysis must be done to ensure that your loan payments are affordable.
"Borrowing more than you can afford to repay is unwise and may ultimately impact your ability to repay. It also negatively affects your credit history," she explained.
Take advantage of discounts, rewards and sales
It's not stingy to use coupons and merchant rewards, Vassell said.
"Look out for sales, and be conscious of where you can receive discounts and rewards when shopping," she said, noting that some banks have programmes through which their members and customers can receive discounts at certain merchants when they access goods and services using their ATM cards, credit cards or reward cards. "Don't be afraid to ask for discounts either, everything adds up.
"There are many different ways to be smart with your money. Using different tools such as budget and saving will ensure that you achieve your financial goals and create wealth for yourself," she says.