How do I save?

In these turbulent times having a little bit put aside is essential. The thing is how do you go about saving? There are many savings accounts out there but not all of them are going to be what you need. So Justmoney decided to look at savings accounts and work out what you can do. This is what you need to do first in order to get you on the road to saving and protecting your future against lifes ups and downs.

• Plan a budget
• Set aside what you can
• Compare savings accounts

There most important thing you need to do is to draw up a budget. When you have planned a budget then you can work out how much you can save. Even if it is only a small amount, put it aside each time you get paid and save it up for a rainy day. Then find out which is the best savings account for you. There are a few things you should ask yourself. Do you want to use your savings account for transactions? What sort of access do you need? Instant? Fixed period? 32 Day notice? When you have worked out your budget you should save a regular amount each month.

Justmoney ran its calculators and can suggest that if you can keep at least R5000 in your savings account then a Sanlam Liquid account will pay well. If you can keep R100 minimum for 12 months then a Standard Bank Contract Save is a good account. The ABSA Target Save account pays well if you have R100 and can keep it for 6 months with a 32 day notice period. And if you can keep a minimum of R10 000 then the Nedbank Park-it account allows you 24 hours withdrawal notice after you have kept the money in the account for at least 14 days.

The best way to realise your savings dream is to deposit a regular amount and put it in a low or no fee account, then have a long term plan and expect to not touch that money for at least a year if not longer. This way you can take advantage of interest compounding and grow your money.

What's in store for the future?

The South African Reserve Bank has released its Monetary Policy Review on the 14th of May 2009. The last review came out in November 2008. GDP contracted at an annualised rate of 1.8% in the final quarter of 2008. This is a result of a number of factors including the global financial problems and inflation. We are still in for a tough time ahead and the markets are not expected to come right too quickly. So what can you do while the turbulence washes over us?

• Batten down the hatches!
• Plan your budget
• Get a savings account

There is now a real possibility that we will enter into recession for the first time in 17 years and the contracting growth we are seeing is expected to last for most of the rest of the year with a turnaround envisaged towards the beginning of 2010 only. Inflation is slowing, partly as a result of the inflation targeting steps taken by the Monetary Policy Committee in cutting interest rates and partly due to the slowing economy damping spending and inflation at the same time. We are not expected to hit the targeted range of 3-6 percent inflation this year although we should come in close to the top end of the target. There are still problems that may occur including a massive hike in Eskom tariffs to fund infrastructure spending.

The report estimates that inflation will hit 6.2 percent by the end of 2009 although this is an estimate with, as with all economics, a heavy dose of Ceteris Paribus, or if nothing else comes along to upset the apple cart. This is a serious flaw in economic thought as projections and estimates always lag behind the reality and reality is in a constant state of flux and it is not really possible to separate factors and treat them as independent when in fact they are highly interlinked and influence each other. So we can expect some light on the horizon but now is the time to expect change and prepare yourself for any shocks that could still occur, plan a budget and stick to it and start putting money aside for just in case.