How to start saving. For real this time!

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It’s that dreaded S-word again… Saving. We all know we have to do it, but so often it just doesn’t happen. It’s as if there are too many surprises in life that need to be taken care of. Before you know it, your saving or investing plan has been pushed to next month’s to-do list.

The best way to start saving is exactly that — just start. Here’s your five-step guide.

Step 1: Work out how much you’re spending

Saving starts with understanding your spending. You need to know how much you spend on fixed expenses like rent and debt payments, and how much you spend on ‘planned’ expenses like groceries, fuel and airtime — plus any other expenses that sneak onto the debit card each month.

22seven makes this really easy — just link your bank account and the app will break down your spending into categories. You’ll quickly be able to see where your money is going each month.

The next step is to table all your expenses into a budget and compare it to your income — that way you’ll be able to see how much money you have left each month. Again, no need to get crafty with calculus, 22seven has a budget function that does this instantly.

Step 2: Cut out unnecessary spending

You’ll be surprised how often you spend money on things that aren’t in your budget. You have to make allowance for this — many people use a general heading like ‘miscellaneous spending’ — but you also have to be strict with yourself. Set a limit and stick to it.

During Step 1, you might have noticed a subscription or membership that you’re paying for but haven’t used in months. Maybe you picked up a pattern of buying non-essentials or overspending on entertainment and eating out. This is where you take back control. Cancel that subscription, eat out less and cut out other unnecessary expenses.

Step 3: Add saving to your budget

Saving shouldn’t be something you do ad-hoc at the end of the month, using what’s left in the kitty. The most successful savers plan for it. Once you’ve got the hang of your budget, include a ‘saving’ line item. Even if you start with a small amount, at least you’re being honest with yourself that this is something you need to do every month. You can always increase your contribution over time.

Set some saving goals to stay motivated. You might want to save R500 into an emergency fund each month, or eventually save up enough for a holiday, or invest 10% of your salary into a retirement fund. You’re a budget whizz now, so you’ll know exactly what you can afford to save or invest, and how to allocate it.

Step 4: Automate your saving

The best time to put away your allotted saving portion each month is right after you’ve been paid. That way you won’t be tempted to spend it. Set up an instruction with your bank that automatically transfers funds from a cheque account to a savings account, for example. You can also set up a debit order for a monthly allocation to an investment fund. One less thing to worry about!

Step 5: Pay off debt as soon as possible

Debt is a saving killer. Try to settle it as soon as possible. There are smart strategies such as the snowball method and the avalanche method to help you do this.

Once you have settled your debt, take that monthly commitment (or at least a big part of it) and allocate it to your savings. You’ve already budgeted for the expense, after all, and this time it’s going towards you.

Saving starts with planning and being mindful of your spending. Start now and watch your money grow. Your future self will thank you!