If a fortune teller drew you closer to their crystal ball, laying out a picture of what your financial future looks like, would you be impressed?

Well I guess some of us would be hoping she makes up a glorious future and sells us dreams because reality is well… bleak.

Conversations about money can be quite awkward for a lot of people, however, if there’s one thing the pandemic has taught us, it’s how crucial it is to always be financially prepared should unfortunate circumstances creep up on us. There are several reasons to save; whether it’s to make a big purchase, invest in a business, become financially independent, prepare for your children’s future – you name it – saving is the tool that will get you closer to reaching your financial goals. 

Last week, we started our savings month series, looking at saving, in the South African context. This week, we are digging deeper, finding out the common excuses we make that derail us from saving and how to break these barriers with financial advisors Sheila Anne-Robey, Ashley Paulis and the Chairperson for the South African Savings Institute, Prem Govender.

Eight Common Excuses For Not Saving And How To Break These Barriers

Excuse 1: “I don’t earn enough money, there’s barely much left over to save anyway” – Anonymous 

Ashley’s tip to breaking this barrier:

“A Penny saved, is a Penny earned”. – Anonymous 

By thinking we do not earn enough to save, we underestimate the power of time and compound interest. When it comes to money, the truth is, we can always find a reason to spend it in one way or another. When we shift our focus to building for the future and living on less than what we earn, we will be able to identify opportunities to start saving. 

Start small, do it consistently and you will see the power of compound interest!

Excuse 2: “I do save; however, I lack the discipline to keep my money saved, long term. Something always comes up (black tax) – I admit that the issue is because I save in accounts where I have easy access to the money” – Hlengiwe Zwane, Medical Assistant 

Sheila’s tip to breaking this barrier: 

Saving is a discipline, just like going to the gym; you must decide to be good to yourself and set healthy savings habits. Transferring money from various savings accounts to current accounts to access your money is a futile exercise but once you decide to be disciplined, your money and your life will benefit. Here are some of my best tips to avoid this endless cycle of saving-to-spend:

  • Set an intention for your savings, whether it is for a deposit on a home or a getaway; when your money has a defined purpose, you are less likely to spend it on things that are not a priority to you.
  • Use savings/investment vehicles that are not as easy to access, such as endowments, unit trusts or call accounts.
  • Always discuss your savings goals with your trusted financial advisor, who is equipped to guide you on different product offerings and can hold you accountable to yourself.

Excuse 3: “Student debt has derailed my life. I’m still paying off my loan after a couple of years of working. I’m generally left with no money to save” – Penelope Hlatshwayo, Entrepreneur 

Prem’s Tip To Breaking This Barrier:

I don’t believe that this is a train smash. Incurring the expense of a student loan is worth the sacrifice because it means that you are now qualified to obtain a good job, something nobody can take away from you. So I consider a student loan to be a good debt because it helped you buy the asset of a qualification that now entitles you to be a professional. In my view, student debt should be paid off fully before you start to save, there is no point in having debt on the one hand and having money in the bank on the other as the interest rate on the debt is definitely more than any interest you are earning on your savings. Remember no bank pays you more interest than they charge you. So getting rid of this debt should be a priority right now, you can have enough time to save when this debt is paid.

Excuse 4: “I don’t have a reason or a goal for saving. I do like travelling though”. Busisiwe Mashele – Business Division Assistant 

Ashley’s tip for breaking this barrier :

“Money looks better in the bank than on your feet.” – Sophia Amoruso

There are certain outcomes that we should all consider saving for example, our Retirement and/or the infamous Emergency Fund. Alongside these can be things that interest you like a well-deserved vacation, purchasing a vehicle and/or buying property. By deliberately planning and implementing these plans, you have not only tweaked your discipline, but also made a wise choice to use interest to work in your favour and assist in achieving your goals.

Excuse 5: “As a freelancer, my income isn’t stable, it’s hard for me to consistently save” – Elizabeth Matloporo, Graphic Designer 

Sheila’s Tip To Breaking This Barrier:

These days, most of my clients are freelancers, creatives, and side-hustlers; all of whom have fluctuating incomes (including myself). Because of this reason, it is crucial to have a financial plan in place that not only caters for the fluctuating income with flexible product solutions, but also to safeguard against circumstances where that income dries up, as is the case for many following the rise of the pandemic. Financial Service Providers have since adapted their advice, and solutions out there are far more suitable for those who don’t keep a standard 9-to-5. 

My 5 money tips for freelancers and the like are:

  1. Do your budget and define fixed and fluctuating expenses, and necessary luxury expenses. It is easier to plan when you know what you are dealing with.
  1. Ensure your risk cover is in place (disability, income protection and illness cover), as this could be the defining protection you need when the unspeakable happens. Risk cover ensures that despite illness or injury you can still look forward to a pay-day.
  1. Attempt annual premiums with most of your expenses, such as school fees, risk cover, savings and investment policies, gym contracts. I find that most of my freelance clients avoid a monthly debit order in fear of low cash flow.
  1. Create an accessible emergency fund! This has saved most of my freelance clients over the last year.
  1. Have an open and honest relationship with a financial advisor you can trust. The advice and knowledge could mean the difference between you becoming a millionaire by 40 or struggling to make ends-meet day-to-day.

Excuse 6: YOLO (You Only Live Once) “My lifestyle doesn’t allow me to save –  Pumzile Taulela, Filmmaker 

Prem’s Tip To Breaking This Barrier:

If one really believes this then there is no way one can become financially independent. Yes you do only live once but that doesn’t mean that you need to spend every cent you earn like there is no tomorrow. Rainy days will come and there can be no better example of a rainy day than what the pandemic has brought. Millions of breadwinners have had to take pay cuts, survive with no pay and worse still lost their jobs completely. The people that have survived are those that had savings or nest eggs that are carrying them until things become normal. Imagine the plight of those who believed in this philosophy of YOLO!!!

Excuse 7: “I’ll save when I make more money” – Ntiyiso Nkomati, Retail Sales Assistant 

Prem’s Tip To Breaking This Barrier:

…And that day will never come with this kind of attitude. There will always be something else, if you do not develop a culture of saving when you earn little, you are never going to develop this culture no matter how much you earn. The savings habit should start with the first pay cheque, no matter how small this is. Unless of course you started off with a student debt that needs to be serviced. In that case pay off the student loan first BUT make sure that the amount that was used to pay off the debt monthly is now channelled into savings monthly. You started your working life paying someone, now is the time to start paying yourself, you became disciplined with those payments towards the student loan, so let the discipline continue into regular savings. 

Excuse 8: “I have a few lump sums I’m expecting soon. I don’t have to save for now” – Thandi Mazibuko, Publicist 

Ashley’s tip to breaking this barrier :

“Get rich slow or get poor fast.” – Anonymous 

Although you might not see the need of saving for now, the discipline and commitment that goes along with it is more important than saving itself. When we distance ourselves from money and what it can buy, we tend to have more control over it and not allow it to control us and force us into a FOMO frame of mind by spending it all the time. If we think about it, how many millionaires or even billionaires built their riches without the habit of saving?

Final Thoughts

Adulting doesn’t come with a manual. The truth is, no one actually knows what they are doing but with information that is easily accessible, and everyday providing an opportunity to do better, it’s important that we follow these guidelines to prepare for a better financial future. 

So don’t let those excuses pile up – start saving now!