Interesting Things To Know About
Put Away R5 A Day
We often believe that in order to start saving we need to have a substantial amount of money, we need to earn way more than we do or receive a higher allowance. Well, what if we’re wrong, what if we don’t need 10s of thousands of Rands in order to start saving, what if all we needed is R5 a day?
Think about it, if were to put away R5 a day, or R35 a
week, you’d have R150 a month and ultimately R1 800 at the end of the year.
This might not sound like much; however, you’d be R1 800 rich than you would’ve been had you not saved that R5 a day.
Now, its sounds all good and well to have this money, but what if an emergency occurs during the year, what you see a cute top at Mr Pride or are craving that new Cadbury Jam-flavoured chocolate and all you have on hand is the money you’ve been saving.
Do we just take out a few Rands from our savings and “Replace it later”?
Using that money defeats the whole purpose of the plan.
So Khomotso, how exactly do we stop ourselves from using that money, how do we fight back all the temptation?
That’s the name of the game, however, I must admit that I’m just as undisciplined as the next person when it comes to spending money, it’s quite a struggle.
Fortunately, we don’t have to do it for ourselves, the banks are more than willing to do it for us using what is typically known as a notice account.
This type of account allows you to deposit any amount of
money at any given time, however, in order to withdraw the money, you’d have to notify your bank (generally 32 days prior).
Not only is discipline guaranteed but you also gain interest on the money you’d been saying you are making your money work for you.
The average rate of this type of account is about 5%. If we apply that rate to our R5 plan, assuming the you’d deposit the money at the end of each month, you’d have R1 842 at the end of the year.
The idea is not to withdraw that money at the end of that period, but rather keep it in for about 5 years and see what happens.
With regards to the “Double-up” component, in the second year, instead of saving R5 a day, you save R10, then R20 in the next and so forth. After 5 year, you’d have roughly (R44 134) in the bank (believe me when I say, that took quite a bit of complex calculations).
The first year is certainly going to be the easiest; you’d only be saving R5 a day. But by the time you get to the fifth, you’d need to save R80 a day or R2 400 a month. Sounds crazy, right? One might argue that it’s impossible and highly improbably, fortunately it isn’t, but we’ll get into that in our next article where we discuss ideas around how exactly we make and save R5 a day.
Side Note: The R5 (double-up) plan is not limited to R5,
you can save however much you desire, whatever works for you, just remember, consistency is key and the double-up component accelerates the grow of you saving.
For now, I hope you keep well, do the right thing and stay financially savvy.
Khomotso Rabotapi (The Suitress)