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Spending the barest minimum
Date: 01 Nov 2008
November 2008
Spending the barest minimum
There is one small thing you carry with you every day that can help you reach the end of the month with money left over. That small thing is your cellphone, and there has never been a better time to reconsider how you use it.
Remember the days when we didn't have cellphones? Somehow we managed to get by without them, and perhaps we still could! You can save a small fortune by:
* only using your cellphone for emergencies
* sending an sms instead of making a call
* sending an e-mail instead of sending an sms
* waiting for the weekend to make your calls, using your free minutes
* opting for a top-up contract option.
And while you are re-assessing your cellphone usage, you can have a look at your bank charges too.
Visit your branch and ask what packages they offer. Some banks have ‘bundles’ that include a certain amount of transactions per month, and it works out cheaper than paying per transaction.
And here's another idea: If you're very disciplined, and your institution allows it, you can cancel your debit orders on your insurance premiums and pay your premiums monthly on the Internet. That kind of manual payment is cheaper than a debit order, but is only for the most disciplined of people who can remember to do it by the same day every month.
Shares - what to do?
When we started this series on money-saving tips, South Africans were grappling with rising food and petrol prices, and a high interest rate. It seemed like a pretty bad scenario, but since then, the world's economy went a bit crazy, and now we're wondering if things are going to get even worse.
When the American sub-prime crisis exploded sending ripple effects around the world, South Africa felt a little bit smug - after all, we weren't exposed to the bad debt like some institutions were in other countries.
But it's been said that when America sneezes, the rest of the world catches a cold, and already the local media are starting to warn that South Africa is not immune to a recession. And it's not just the thought of a recession that is worrying folk - it's the reality of tumbling share prices that has investors truly alarmed.
There's an old joke that goes like this: Q: What’s the definition of a long-term investment? A: A short-term investment that went wrong.
It's funny, but it's true. You might have bought shares expecting them to rise in the short term so you could sell at a peak – but with share prices falling, it's best to hold on and see your purchase as a long-term investment!
Fundamentally though, the current share market shows in a truly dramatic way just how important diversification is. Diversification means spreading your investments across assetclasses - property, bonds, shares and cash.
Why diversify? Because if one asset class performs badly, the others might be doing okay. If you only invest in shares, and the share market tumbles, your investments lose significant value.
Sure, the share market will come up again over time, but if you are close to retirement, for example, your shares wouldn't have time to recover from a downturn.
Stock market investment should anyway be seen as a long-term investment - if you can approach it like that, you will be able to ride out the market dips without panicking. Don't invest money in the stock market that you know you will need in the short term.
The great thing about rock-bottom share prices is that they are cheap to buy, so buying some shares now could be a good idea. (On the other hand, who’s to say that today's prices won't look like the selling opportunity of a lifetime in six months from now?)
If you have lots of debt, service that first, and remember that investing should only be done with your spare income. You may have to work hard on your budgeting to create some spare income, but it can be done.
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