all know we should save for our future, whether it’s for retirement, our kids’
education or a rainy day. But why is it so hard to stay committed to good
live in a consumerist world where it’s easy to get swept up by constant urges
to have what others have – always being on the hunt for the next big thing.
spend money on these ‘wants’ first and savings last because spending is
instant, visible and tangible. But the only way to make savings work for you, is
to pay yourself first, not last, otherwise you’ll never have any money left
over for future goals and opportunities.
future is just as important as the bills you have to pay now. ‘Future you’ also
deserves to be looked after. Think of saving money as a method of self-care.
You are affording yourself opportunities in the future, whether it’s to start a
business or to live comfortably when you can no longer earn a salary. If you
don’t save, you’re actually limiting yourself. Don’t sabotage your own future.
Is ‘Pay Yourself First’?
yourself first is one of the oldest rules of personal finance. As soon as your
salary hits your account and you start paying bills, you should set money aside
for savings or paying debt. How you pay yourself depends on you – it can be a
percentage of your salary or a small amount.
be warned about a ‘giving mentality’. Giving to others instead of ourselves
gives us an immediate emotional benefit of feeling appreciated. But if we
channel this generosity into our own savings, we can provide for others for
years to come.
Steps to ‘Paying Yourself First’
in ‘future you’
you’ deserves to be paid as much as the school fees, the phone bill and the
alarm company. By paying yourself first, you’re mentally establishing saving as
a priority. Setting aside money each month to grow your harvest of the future,
so to speak, is empowering. It will help you maintain and improve your
lifestyle over time.
How to do it: Relook
your budget so you know exactly what’s coming in and going out, and so that you
can list yourself as a bill with your other expenses. Automate this payment as
much as possible, whether it’s a contribution to retirement savings going off
before you get your salary, or a monthly direct debit.
If you pay yourself
manually, it’s normal to have feelings of pain and loss. But if you never see
that money, you’ll surprise yourself with what small, regular amounts can
become over time.
Empower yourself with
Knowledge is power and
if you’re going to pay yourself first, find a method that works for you. Just
as you would put a lot of research into the right exercise or health regime for
your lifestyle, find a method of paying yourself first that is doable and sustainable.
How to do it: Focus on
spending less each month and banking the difference. You could also get a side
hustle and put all of your profits towards your savings, separating your salary
from your extra income.
Get financial advice
It can be hard to know what
to focus your savings on. Of course, you may also need to save for a house or a
car, but it’s important to take a holistic view of your savings. Talking to a
financial planner about your savings and financial objectives can help you
strike the right balance. It can help you plan for all eventualities that you
may overlook on your own.
How to do it: Don’t be
shy to ask for help. We usually get things done when there are other people to
hold us accountable. Look into setting up a social savings group with a
tax-free savings account and you’ll not only keep one another motivated, but
also enjoy lower fees.
Make your savings goals
As Behavioural Economist
Dan Ariely points out, when we invented money, we made spending very visible,
but we made saving completely invisible. That’s something we need to change,
and having very clear savings goals will help. Research has proven that people
who invest money with very specific goals save a lot more over the long term.
It’s about retraining your mind to focus less on the now and more on the
How to do it: Be very
clear with yourself what your savings goals are. It’s good to have short-term
and long-term goals. Give each goal a name and an end date, and identify what
each goal means to you personally. Make these as visible and specific as
If you want to live in a
different country one day, put up photos around your house as motivation. Use
an app to see how your savings are growing or create a colourful progress
Three Ways to Spend Less
The world is making it
easier to get around without cash, but we should make our money more visible –
not less. We should put limits in place to help ourselves think before we
To spend less:
Try the ‘envelope
method’ for a week: only spend cash you’ve budgeted for that week. You’re bound
to spend less.
Try to curb emotional
spending, for example buying a new piece of tech because you feel bored or sad.
Replace that with something else, like calling a friend.
Try to stick to one big
shop a month and only one top-up shopping trip per week. The less time you
spend at the shops, the better for your bank account.
It’s important to be
very honest with yourself about the difference between self-care and
self-sabotage, take care of the future you by setting clear financial goals.
Consider consulting a financial planner before you make any big decisions
regarding your savings and investments.
Article source –
IOL.co.za, Written by Kenosi Magosha, Head: Client Solutions Savings at Sanlam.
Disclaimer: ES Brokers is not licensed or authorized to give investment advice.
This article is posted with purposes of educating and help people with ideas on