The end of July marked the end of Savings Month; an initiative by the South Africans Savings Institute that encourages a culture of savings among South Africans. In the spirit of financial freedom, MatieMedia investigated whether Stellenbosch students save money, and how they can improve their financial status.
Studies by the Reserve Bank show that South Africans are among the worst money savers in the world with savings making up only 15.4% of the country’s gross domestic product (the sum of everything produced by the people and companies of a country).
However, Stellenbosch students seem more saving conscious. In a poll of 50 students, 40 said that they do save money, and only ten who do not. Of these saving-savvy students, 73% keep their money in a savings account, 18% choose to invest their money, and 9% prefer to keep it where they can see it, in a piggy bank.
Most students said that they save money for future financial stability or for things that they would like to have.
Banks offer various benefits to students. These benefits vary from low monthly fees, free data and discount on meals to free cash withdrawals and access to online banking. Let the bank of your choice count your money, while you count your hours of sleep during silly season.
According to Nicole Benjamin, a sales consultant at Absa Bank, a savings account at a bank with an appropriate interest rate, is the first step to increase your funds. “It is a nice way to start saving money because you can’t touch your funds at all,” she says.
How much of your monthly allowance should you put away? That is up to you. Carel van der Merwe, a senior lecturer at the Stellenbosch University Department of Statistics and Actuarial Science, says that every person has a different amount of reserves with a different desired outcome.
Van der Merwe advises students to determine the amount that they would like to save over a certain period of time. After establishing this amount, students can either reduce excess spending or work for more income to achieve their goal.
One tip that applies to all, is to not fall for the seductive suggestions of debt.
“Be cautious of debt spiralling,” Van der Merwe warns. A once-off loan from a friend never stays at simply that, as your financial predicament might not change the following month. Before you know it, you once again rely on the “one-time only” quick fix and find yourself in an interest-earning loan that you cannot pay back.
Needless to say, a credit card should be used with caution. However, it remains important to build up a positive credit record for your future. Van der Merwe proposes an account at a clothing store that one can pay-off religiously. -Tania Heyns and Paula-Ann Smit
More tips to save money: