How To Budget, Save and Avoid Debt

Financial Literacy is learning how to understand your money and changing your behaviour as a result. Getting to grips with concepts such as budgeting, saving and debt may sound daunting but the more you know, and the more you learn, the better your financial decision-making will be.

As April is financial literacy month, now is the perfect time to learn how you can make your money work for you. This is your money, after all, and it affects every single aspect of your life. Below are three simple ways to budget, save and avoid debt. Each of these tools will help you develop healthier money habits and make you feel more comfortable about managing your money.


How to budget

Have you ever heard of the saying “failing to plan is like planning to fail”? If you don’t plan, you can’t win and all good financial planning begins the same way – with a budget.

Creating a budget can help you keep track of your spending and bring your attention to possible red flags – perhaps you are spending too much on your morning coffees or phone contract payments?

Here are a few simple steps to get you started:

  • Make a list of your fixed monthly expenses. Fixed costs are the things that will be the same each month such as your rent and children’s school fees. Write down the total amount you owe on each of these fixed costs.
  • Now, make a list of any flexible monthly expenses. These costs are likely to change slightly from month to month such as transport costs, groceries and family expenses. Write down how much you expect each of these costs will come to each month. For some of these costs, you will need to guess the total amount – be realistic.
  • Add your fixed and flexible costs together to get your total expenses for the month and subtract this amount from the salary you earn. Remember to deduct tax, UIF etc. from your salary before you deduct your total expenses.
  • The amount that you have left after you have deducted your total expenses is known as net income. This money can be saved or used for emergency expenses that you may not have seen coming in the month.

Try to stick to your budget as best you can! Your goal should be to spend less than what you earn. Taking the time to write out your expenses once or twice a week may sound time-consuming but it will help you stay on top of your spending and make you feel more in control when it comes to your money.


How to save

Many people think that you need to be wealthy to save or invest and this simply isn’t true. Findings from a recent Sanlam Survey revealed that an inability to save is among South Africans’ most common financial concerns.

The truth is that you can do a lot with a little and the sooner you start, the better off you and your finances will be in the future.

So, here’s a way to start saving:


1. Open a tax-free savings account

Opening a savings account at your bank is easy. All you need is: to be 16 years or older, a copy of your ID (or passport if you are not an SA citizen) and a proof of residence that is not older than 3 months.

2. Start small

At the end of every month, set aside money to put into your savings account. It doesn’t matter if it is R100 or R1000 – all savings are good savings!

3. Build your nest

Next, take the challenge one step further and try to increase the amount you save each month. Ideally, you should work to set aside 20% of your salary (after deductions) in your savings account.


The best part about a tax-free savings account is that you will need to give notice to the bank before you can withdraw any funds. This is the perfect strategy as you won’t be able to access your money at the drop of a hat.

You should only request to take money out of your savings account when it is an absolute emergency. It will all be worth it as you watch your money accumulate!

How to avoid debt

A recent survey from PwC found that 80% of South Africans rely on unsecured loans to cover their monthly expenses. Perhaps more worrying is the fact that 10 million of us have bad debt. This means that 10 million of us have missed three or more monthly repayments on our debt.

Payday lenders are also a huge problem in South Africa. These lenders exploit the payday poverty cycle by preying on ordinary, hard-working South Africans that cannot afford to make it to the end of the month. If you’ve ever borrowed from a mashonisa before, you’ll know that their extremely high interest rates makes it almost impossible for you to make repayments.

The advice from experts like American billionaire, Warren Buffet, is to never take out a payday loan. And if you aren’t in a position to take Buffet’s advice, SmartWage can help you. 

SmartWage gives you access to your salary before the end of the month. So if an emergency expense comes up that was not included in your budget (because you have a budget now) – instead of borrowing from someone else, why not use the money you have already earned throughout the month to pay for that expense? SmartWage charges 0% interest, meaning you can say goodbye to high interest loans and bad debt!

We have also partnered with Collab2, a debt consolidation agency that is committed to understanding why their customers are unable to pay and helping them find workable solutions to manage their debt. This service is available to all SmartWage registered users for free.

The principle is simple.  Why should you have to wait until the end of the month to be paid? If you worked today, you should be able to get paid today. SmartWage gives you access to 25% of your net income whenever you need it – with no interest and no credit check. This means no more borrowing or dipping into savings, no more penalties and no more debt – just access to your own money, as you earn it.

If you would like to learn more about SmartWage, visit our website SmartWage, or call us on 082 720 9905.

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