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.

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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.

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