National Savings Month, which takes place in July every year, is an initiative created by The Savings Institute of South Africa (SASI). This calendar event focuses on financial literacy for all and aims to challenge consumers and business owners to work towards living within their means, while also reminding them of the many benefits of saving.
Most South Africans don’t have a safety net to protect themselves during periods of recession, climbing inflation, interest rate hikes, unexpected expenses, and the overall increase in day-to-day expenses. This is due to the fact that the country has one of the lowest savings rates in the world. Coupled with this, statistics show that 90% of South Africans do not have enough savings to retire, that the average South African spends 80% of their salary in just five days, and that 67% of their monthly income is used to pay off debt.
Based on the above, it is more important now than ever for all South Africans, including business owners, to take stock of their financial situation and make saving a priority. Regardless of how small or big your business is, understanding the ins and outs of how to save money is crucial when it comes to building resilience, safeguarding your operations, and setting it up for future success.
There are many factors that play a role in the way individuals and small business owners see savings, as well as their attitude toward this important financial commitment. This is based on the environment in which they grew up, their family’s attitude towards money, and what they have learned about savings throughout their lives.
Fortunately, there are practical steps any individual or small business owner can take to start their savings journey or build on what they currently have, to safeguard the future of their business:
Build a financial buffer
Many small businesses find themselves in trouble because they do not have a safety net in place to help them when tough times strike. A good rule is to save 5% of your revenue every month, if possible, to see you through an unexpected crisis.
Invest in technology
Whether you buy an electronic payments device, or slowly start building an online shop for your business, technology will help you save money by reducing expenses, such as monthly bank charges, which will help streamline your business operations.
Review your budget regularly
It is important to keep an eye on the financial health of your business. One way of doing this is to review your monthly budget. By doing this, you will have a clear picture of where you are spending money unnecessarily, have a view of profits and losses, and keep track of your spending habits. Where possible, reduce spending and put that money towards your savings.
Set goals for yourself
However big or small, setting a savings goal for yourself is a good way to keep yourself accountable, and to follow through with putting some money aside every month. Working towards something keeps you motivated and on the right track.
Keep your expenses as low as possible
One way to save cash, is to ensure that your monthly expenses are as low as possible. Work with affordable yet reliable suppliers, hire staff that you can upskill, keep your operations small if you need to, and negotiate for better prices where you can. Every cent that you manage to save adds up and can be used towards your savings.
Beyond National Savings Months, educating yourself about healthy savings habits, and applying them to your daily life, will serve you and your business well in the future.
Disclaimer: Mastercard is not an authorized Financial Service Provider (FSP). Therefore, the information provided in this communication does not constitute advice. It is important to note that the use or reliance on this information is done at your own risk. Prior to making any investment decision, it is strongly recommended that you consult with your Financial Adviser.
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