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saving for short-term goals

Whenever you can, get into the habit of saving up before you make purchases – whether it’s a TV or a holiday – rather than buying on credit.

Saving before making a purchase instead of using credit is a habit that can save you a fortune. Here’s why:

Let’s say you want a new HD TV. You’ve found one with a 39-inch screen and a built-in soundbar. The price is R3 600. If you buy it on credit over 12 months, and the monthly repayment is R355, the TV would cost you a total of R4 260. So, you’d pay an extra R660 in interest and fees.

If you wait to buy the TV, and save the R355 for 12 months instead, you could buy the TV for the R3 600 cash price, and then use the R660 for other goals.

It gets even better. If, for example, you saved the money in an account that pays 4.75% interest a year, after 12 months you’d also have earned R93 in interest. So, saving for the TV gives you an extra R753 total in your pocket.

Whatever the goal, you can take this approach. Work out how much you need, and how much you need to save each month to reach your goal by the time you want it. Then get saving and, ideally, earn interest while you do it.

Pay yourself first

The key to achieving your savings goals – both the long-term and the shorter-term goals – is to pay yourself first.

If you wait until month-end to save what’s left of your money, you’ll never have anything to save. Instead, save as soon as you're paid. You can even automate this using a stop order.

Remember, you can achieve amazing things in the future if you’re willing to make some choices and sacrifices now.

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