Don't let challenging times leave you broke: 7 money-saving tips for youngsters

Busy roads and potholes are enough to drive first-time motorists mad, but there's nothing like a petrol price hike to test your sanity.

The department of mineral resources and energy has announced a 24c/l decrease in the retail price of 93 ULP and a 17c/l drop for 95 ULP, while the price of illuminating paraffin decreases by 4c/l.

“The increase to diesel though, means input costs in, among other sectors, agriculture and manufacturing, are also likely to increase, which may result in higher prices for consumers,” said the Automobile Association of South Africa (AA).

With these factors impacting consumers' pockets, it's expected younger South Africans, especially, will feel overwhelmed.

Creative director at Sanlam Indie Karmen McDonald said it’s not uncommon to feel overburdened in managing one's funds and that the key to doing so is to establish good habits early.

Not sure how to survive these financially challenging times? Here are McDonald's top tips for saving every penny.

1. CREATE A SOLID BUDGET

Budgeting is the foundation for financial success. Start by tracking your income and expenses to get a clear picture of your financial situation. Then, allocate your money wisely, ensuring you cover necessities and savings, with a little room for discretionary spending. Remember, budgeting doesn't mean sacrificing all the fun stuff, it's about finding a balance that works for you.

2. TACKLE YOUR DEBTS HEAD ON

If you have student loans or credit card debt, it's essential to proactively address this. Pay more than the minimum amount whenever possible, as this will help you reduce interest charges and pay off your debts faster. It might require some temporary sacrifices, like cutting back on dining out or entertainment, but the freedom from debt will be worth it.

3. BUILD AN EMERGENCY FUND

Life can be unpredictable, so having an emergency fund is crucial. Aim to save three to six months' worth of living expenses in a separate account. Start by setting aside a small portion of your income each month and watch your emergency fund grow over time. This will provide you with peace of mind when unexpected expenses arise.

4. START INVESTING EARLY

Time is your greatest asset when it comes to investing. Even if you can only contribute a small amount, start doing so as early as possible. The power of compound interest will work in your favour, allowing your money to grow over time. Do some research, explore different investment options and consider seeking advice from a financial adviser to make informed investment decisions.

5. PLAN FOR RETIREMENT

It may seem far away, but it's never too early to start saving for retirement, especially in the South African context. Consider opening a retirement annuity fund (RAF) or a tax-free savings account (TFSA) to begin building your retirement savings. These accounts offer tax advantages and can help you grow your money over the long term. Research has shown that starting early, even with relatively small contributions, can be more effective than starting in the middle of your career with a large proportion of your salary.

6. PROTECT YOUR LOVED ONES WITH LIFE INSURANCE

Life insurance is an often overlooked but essential component of financial planning. Consider getting a life insurance or an income protection policy to protect your loved ones in case of an unforeseen event. Life insurance provides a financial safety net and can help cover expenses such as outstanding debts, funeral costs and ongoing living expenses for dependents, while income protection replaces your income should you be unable to work due to injuries or illness. Research different types of life insurance policies and consult with a reputable insurance professional to find the best option for you.

7. EDUCATE YOURSELF ABOUT PERSONAL FINANCE

Don't be intimidated by financial jargon. Take the time to educate yourself about personal finance. Read books, follow reputable financial blogs, listen to podcasts and attend seminars. The more you know, the better equipped you'll be to make informed decisions about your money.

McDonald goes on to say: “Financial success is a journey, not an overnight achievement. By staying proactive, you'll be well on your way to building a solid foundation for your financial future. Take control of your finances, embrace a healthy money mindset and enjoy the peace of mind that comes with financial stability.”