Financial Education

save to spend: get what you want for less

It sometimes feels like good budgeting means spending as little as possible on things you want, and only on things you need. But a good budget should help you plan and prioritise your spending so that you can spend on the things you want, without compromising your well-being or your future.

Article Image

Saving to spend is a great way to get more out of your money and spend less to get the things you want.

Here's how it's done

Let’s say you want a new TV. To avoid waiting, it’s tempting to buy it on credit – but this is an expensive way to buy anything. Here’s how to do it for less:

You choose the perfect HD TV. It sells for R3 600. 

To pay for it on credit over 12 months, the monthly payment including interest would be R335. This would increase the total cost of the TV to R4 020 (R335 X 12 = R4 020).

Instead, you set up a stop order to save R335 every payday for 12 months. 

You save the money in an account paying you 5% interest a year, compounding monthly. Because you earn interest while you save, at the end of the 12 months you have R4 130.56 in the account. 

Now you can buy the TV at the R3 600 cash price and keep the rest of the money you have saved and earned in interest. 

4 130.56 - R3600 = R530.56 

So this leaves you R530.56 to spend on something else or put towards another goal. 

If you consistently save to spend as often as you can, you will save yourself many thousands over your lifetime. This gives you more money to use for achieving other goals and dreams. 

Saving for anything

You can use this approach to save for any goal, big or small – whether it’s a holiday, a wedding, a car or an Xbox.

Use this savings calculator to calculate how much you need to save each month to reach your goal by a particular date.

Was this article helpful?

you may also like...

View All Other Articles View All
build your money know-how

build your money know-how

One of the most simple and effective changes you can make to build your financial security is to improve your money know-how.

Read More
Tax-efficient way to boost savings

Tax-efficient way to boost savings

In South Africa, there are 2 excellent ways you can get a boost to your savings, courtesy of the taxman. Here is how you can boost your savings.

Read More
4 ways to build your financial security

4 ways to build your financial security

With so much uncertainty in the world at the moment, you can take steps to increase your sense of financial security.

Read More
compound interest: why time is literally money

compound interest: why time is literally money

Compound interest is what makes money grow. When you save money it can work for you and when you borrow money it can work against you. A thorough understanding of the concept is an essential tool for your financial toolbox.

Read More
View All Other Articles

browse more articles

Related Articles All Articles