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The four steps you need to take towards saving for the future

The four steps you need to take towards saving for the future

Many South Africans are finding saving to be an unattainable goal.

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When planning for the future, having an end goal in mind is essential on your journey to success. When it comes to our finances, saving is the reason we plan, but many South Africans are finding saving to be an unattainable goal.

The South African Reserve Bank’s Quarterly Bulletin revealed that only 13,3% of South Africa’s GDP is saved. Some of the world’s top national savings rates are between 64% – 44%, which indicates that South African’s severely lack a savings culture.

Janine Horn, a certified financial adviser from Momentum Financial Planning encouraged South Africans to take that leap and set up a savings plan.

She said, “as South Africans, we are proud people but also keep our heads in the sand. Our financial literacy is so dismal, and if we don’t do anything about it, our people will continue to face financial hardship. Having a savings plan is a blueprint for achieving your financial goals.”

According to Janine, a savings plan is a way to grow your money in order to reach the financial goals you set for yourself. “It pens down, in detail, the goal in question and what is required to achieve the goal.”

Setting up a personalised savings plan does not have to be complicated. Janine recommends the steps below when setting up a savings plan.

Step 1: Look at your budget

Your budget demonstrates your current financial picture. Carefully analyse your budget and comb through all your expenses, then decide how much money you are willing to put aside every month. If you do not have a budget, your bank statements can provide insight into your critical expenses.

“If it seems like you do not have enough to save, try cutting down on your unnecessary expenses,” Janine says. Once you've reviewed your budget, you can direct your attention to determining your financial goals.

Step 2: Establish your goals

Decide whether you are saving for a short-term goal, such as buying a car or a long-term savings goal, like your retirement. “Usually, long-term goals do not require immediate cash, and you have a longer time frame to save for these,” Janine says.

She says using the age-old SMART approach when setting up goals is essential. SMART stands for Specific, Measurable, Achievable, Realistic and Time-bound. “Now that you know how to establish your goals, the next step will help you to decide how to reach these goals.

Step 3: Decide how much to allocate to each goal

If you are saving for numerous goals simultaneously, Janine says it is vital to pen down how much you are saving towards each goal. For example, if you are saving for a car, your child's education, vacations, and emergencies simultaneously, you need to determine what is a reasonable and realistic amount to meet the demands of each goal.

Step 4: Determine where you will keep your savings

Once you have decided how much money you will allocate to each goal, you can now weigh your options regarding where you will grow your money. “When saving, there are numerous options, such as a savings account, money market, tax-advantage account or taxable investment account, among others,” says Janine.

She says these options provide different benefits, and it is crucial to analyse each option carefully and decide which option will allow you to maximise your savings.

Speaking on how you can grow your savings, Janine says, “Speak to your financial adviser at the beginning of the process. They will guide you every step of the way, consistently evaluate your savings plans and ensure you are on track to achieve the savings goals you set, guiding you on your journey to success.”


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