Become a successful saver and start your journey to financial freedom today

March and April are very special months for South Africans. They included the commemoration of two days that were very important milestones on our country’s journey to democracy and liberation. But Human Rights Day and Freedom Day are also important reminders for most South Africans that we are still on another very important journey – to financial freedom, which is one of the often-overlooked human rights. Of course, while government can create an environment for us to achieve such financial freedom, it’s up to each of us to undertake the journey ourselves. And one of the best ways to start that journey is a commitment to saving.

Sisandile Cikido, Head of Retail Investments at Nedbank points out that South Africans still struggle to develop a savings habit, but this need not be the case. “When you ask people in our country why they don’t save, the most common response is that they don’t have the money to do so, especially during these tough economic times” she says, “however it is possible for most of us to save,  and you don’t need to have lots of money to do it; just a real desire to change your future.”

She offers four (not so secret) secrets to becoming a successful saver.

1. Know your ‘why’. There are few things more motivating than a clearly defined goal. Which is why Cikido encourages anyone who wants to be successful at saving to know exactly why they are doing it. “You have to have a clear ‘why’ in mind,” she says, “whether it is a big future vision like a house or car deposit or a good retirement, or an emergency fund for those unexpected expenses that always tend to crop up.”

2. Decide on the best ‘how.’ Cikido says that once you have your savings goals clearly defined, you need to ensure that you choose the savings or investment account that is best suited to get you to those goals. “Every savings vehicle is specifically designed to offer unique features,” she explains, “so there are some that allow you to access your money quickly, but pay lower interest or are riskier in nature, for example the interest rate is not guaranteed; and then there are others that offer a higher interest rate but require you to leave your money untouched for a fixed term or longer investment period, to yield the desired results.”

She cites the Nedbank Tax-Free Savings or Fixed Deposit account and Nedbank Optimum Plus account (for individuals aged 55 and older) as examples of these different types of savings vehicles designed to meet your specific savings goals. Money placed in the Tax-Free Fixed Deposit account earns a guaranteed annual effective interest rate of up to 6.11% on expiry, while the Nedbank Optimum Plus account pays up to 6.10% effective interest rate on expiry , but you need to leave your money in the account for 12 months or more.

Then there is the Nedbank JustInvest account, which can be opened in under two minutes on the Nedbank money app with a minimum R500 initial deposit. It offers a tiered interest rate of up to 4.75%, and you have access to your funds within 24 hours. You can also add to the funds in the account at any time and the Structured Saver feature allows you to set up a monthly debit order to regularly deposit money into the account (see point 4), which gives you a chance to win a further R50 000 deposited into your JustInvest account by Nedbank.

3. Become a budgeter. To most people, ‘budget’ is a four-letter word. But Cikido says that there is no better way of setting yourself up to become a successful saver than having an accurate and honest household budget. “Budgeting is not about restricting yourself or sucking all the fun out of your life,” she explains, “it’s actually the opposite, because a budget shows you exactly where you are wasting money, so you can put more of it towards the things that really add value to your life – like an entertainment allowance and regular savings for a better future.” She points to the Nedbank MyPocket feature as a good way of managing your budgeted amounts. MyPocket offers multiple savings ‘pockets’ linked to your Nedbank current account. You can name each one according to the whatever you are budgeting for or goal you are saving towards and earn up to 3% interest on the amounts you put into each pocket.

4. Make savings automatic.

Cikido says that one of the most valuable pieces of savings advice she received early in her life was to “pay yourself first.” What that means is that the moment you receive your monthly salary – before your debit orders and other expenses are deducted from your account – you should put the amount you’ve budgeted for savings or investment into the relevant saving vehicles. That way you’re never tempted to use your savings money for other day-to-day wants or needs. “The best way to make sure you pay yourself first is to automate your savings deposits every month,” she says, “which for Nedbank clients is as simple as setting up a monthly debit order or a repeat monthly transfer on the Nedbank money app or by logging in to Nedbank online banking.”

Cikido emphasises that, while it’s understandable that many people think they can’t save in the current economic environment, the truth is that it’s at times like these that developing a savings habit is most important. “If you put off saving until your finances are in better shape or the economy improves, you’ll probably never start to save,” she says, “but with a little self-discipline, a vision of your best future, and some solid and flexible savings solutions, anyone can be a successful saver and begin their journey towards financial freedom right now.”