The month of July is Savings Month, as declared by the Savings Institute South Africa. The aim is to create awareness campaigns to educate South Africans about the importance of saving.
As the COVID-19 pandemic continues, it has also affected people’s income, and because of lockdown many companies continue to retrench employees.
Many families are struggling to survive and monthly expenses are piling up, making it harder to save during this time.
Stokvel Talk spoke to Pule Maphango, an Executive Wealth Planner with financial services company Liberty, who explains that saving money used to be viewed as being responsible and planning for things that might go wrong.
But this has changed.
“Today saving is not only about being responsible, but it is an absolute need because of the effects of COVID-19.”
The lockdown shows us that we can cut down on spending unnecessarily. Some people are able to work from home and a lot of entertainment and social services are closed which means they spent less money on transport, fast food and alcohol.
Maphango encourages people to also think about the money they can save through stokvels.
Here are three tips for stokvel members
Savings clubs need to prioritise growth rather than saving
Stokvels are not all the same and not all have the same goals. There are those that contribute monthly where contributions are distributed to one of the members. There are also those that operate as a savings scheme where monthly contributions are collected and are distributed amongst members at the end of the year. These stokvels could also start thinking about putting some of the money into long-term savings accounts from anything between five to ten years. They could collect the money each month and invest those funds.
Do more research into investing
When it comes to investment, it’s important to think about financial growth rather than putting the money into a savings account at the bank. Stokvels should consider approaching investment houses to have access to market wealth rather than just putting money away for little or no return at all. It’s important to do research about investment opportunities that are out there.
Think about income-generating opportunities
Stokvel members and stokvels can start thinking about ways in which they could turn their savings return into money generating projects, either through business or entrepreneurial projects. For instance, some people have used their savings from stokvel to start businesses while continuing with the stokvel. Entrepreneurship is not for everyone, but it can be rewarding with the right business opportunity.