Bank exec shares secret to smart saving

FOLLOWING recent news that 49% of households are saving less than they were a year ago, African Bank Group Executive Alfred Ramosedi is revealing a simple method for Zululanders to bank on.

‘While most people know that a budget is necessary, many simply do not have the time to do the research and the legwork that goes into actually creating one.

‘Drawing up a budget is not the intensive and confusing task people think it is and the application of a simple rule is one sure way of organising your finances for good. It is the 50/20/30 rule.

‘Basically, this rule states that 50% of your budget should go towards paying your fixed expenses, 20% towards your savings and investments and 30% should be reserved for any additional costs that vary from month to month, such as petrol, groceries, entertainment and eating out.

‘For instance, if you earn R16 000 per month, a maximum of R8 000 should be dedicated to paying your fixed expenses, R3 200 to your savings and investments and R4 800 to your varying expenses.

Also read: Bank exec shares secret to smart saving

‘It is best to break this down even further, adding categories under these three separate portions of the budget, such as rent, medical aid, car insurance, groceries and petrol.’

Ramosedi says many people make the financial error of using money that should go towards savings and investments for entertainment and other luxuries.

Avoiding budget blunders

Cut down on spending in the additional expenditure category and this can be done in a number of ways:

• Limit the number of times you eat out during the week

• Eat at restaurants that have cheaper, better value meals

• When going shopping, take a certain amount of cash to cover the cost of items you intend to buy

• Pay attention to the brands you buy when you shop for groceries

• Compare prices on different types of items with other stores before making purchases and take advantage of special offers

• Don’t buy items on sale that you normally would not buy

• Restrain yourself from impulse spending.

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