Put your small change to good use

South Africans are notoriously poor savers. According to the 10X Investments South African Retirement Reality Report 2021 (RRR21), 64% of us are not saving because there is simply nothing left at the end of the month. Once we have paid for electricity, school fees and other household essentials, there’s very little over to put away for a rainy day.

But what if you could, for example, round up a few cents here and there on every purchase you make to put away as a micro investment with a medium to long-term return? Here are six ways you can put your extra change to good use:

1. Decide on your priorities. Can you make do with one less takeaway coffee each week if you have a short-term savings goal in mind? Cutting back on four expensive lattes could save you almost R200 a month. Over a year, this will add up to R2 400 that you could use towards holiday spending or gifts for the family.
2. Micro invest. While we often think we need to have a lot of money to start saving, even just a small savings each month can make a big impact. Micro investing involves allocating small amounts of money into a market or cryptocurrency portfolio. “Micro investing is a good way of embarking on an investment journey,” says  Tony Mallam, MD of upnup. “One of the many benefits of micro investing is that you don’t need much capital to get started. But you do need to be consistent.”
3. Make saving automatic. “We all have a few extra coins lying around in our car, or on the kitchen counter. By automatically allocating some of this extra cash by rounding up transactions and allocating the amount into a digital savings pocket, you will be able to reward yourself after a few months with very little effort. “In this way, small change can make a big difference — especially as it is consistently allocated over a period of time,” explains Mallam.
4. Pay a bit extra into your bond each month. “Even just R100 extra on your monthly bond repayment will reduce your interest over the loan repayment period and shave a few months off your loan,” says Carl Coetzee, CEO of BetterBond. For example, paying R100 extra on a R1 million bond at the current prime lending rate of 7.5% will save you just over R30 000 interest over the loan repayment period. It will also shave six months off your 20-year bond.
5. Choose the right products. A tax-free savings account is a great way to save for long term goals without paying tax on interest earned on dividends received. Also, you won’t have to pay tax when you make withdrawals. Set out your goal for specific investment products and design a plan to achieve them.
6. Use a budget and spending tracker. There are plenty of apps that can help you keep track of your monthly spending. Consider using apps such as Old Mutual’s 22seven which allows you to monitor your savings and investments. Banks such as Capitec and FNB have similar apps.

South Africans are notoriously poor savers. According to the 10X Investments South African Retirement Reality Report 2021 (RRR21), 64% of us are not saving because there is simply nothing left at the end of the month. Once we have paid for electricity, school fees and other household essentials, there’s very little over to put away for a rainy day.

But what if you could, for example, round up a few cents here and there on every purchase you make to put away as a micro investment with a medium to long-term return? Here are six ways you can put your extra change to good use:

1. Decide on your priorities. Can you make do with one less takeaway coffee each week if you have a short-term savings goal in mind? Cutting back on four expensive lattes could save you almost R200 a month. Over a year, this will add up to R2 400 that you could use towards holiday spending or gifts for the family.
2. Micro invest. While we often think we need to have a lot of money to start saving, even just a small savings each month can make a big impact. Micro investing involves allocating small amounts of money into a market or cryptocurrency portfolio. “Micro investing is a good way of embarking on an investment journey,” says  Tony Mallam, MD of upnup. “One of the many benefits of micro investing is that you don’t need much capital to get started. But you do need to be consistent.”
3. Make saving automatic. “We all have a few extra coins lying around in our car, or on the kitchen counter. By automatically allocating some of this extra cash by rounding up transactions and allocating the amount into a digital savings pocket, you will be able to reward yourself after a few months with very little effort. “In this way, small change can make a big difference — especially as it is consistently allocated over a period of time,” explains Mallam.
4. Pay a bit extra into your bond each month. “Even just R100 extra on your monthly bond repayment will reduce your interest over the loan repayment period and shave a few months off your loan,” says Carl Coetzee, CEO of BetterBond. For example, paying R100 extra on a R1 million bond at the current prime lending rate of 7.5% will save you just over R30 000 interest over the loan repayment period. It will also shave six months off your 20-year bond.
5. Choose the right products. A tax-free savings account is a great way to save for long term goals without paying tax on interest earned on dividends received. Also, you won’t have to pay tax when you make withdrawals. Set out your goal for specific investment products and design a plan to achieve them.
6. Use a budget and spending tracker. There are plenty of apps that can help you keep track of your monthly spending. Consider using apps such as Old Mutual’s 22seven which allows you to monitor your savings and investments. Banks such as Capitec and FNB have similar apps.