Are your savings making you richer or poorer?

Dear Member

If you read Isolezwe newspaper, please look out for Phumelele Ndumo’s articles on savings every Friday in July starting the 6th of July.

Year in and year out I know of people who save money but sadly, their savings are not making them richer because they do not know the basic rules of saving money. They pay too much in bank fees as they deposit their money with a bank and also pay a lot when they withdraw the money. The interest rate they earn is so little it is far less than the rate of inflation.

So what should you look for to ensure your savings make you richer, not poorer?

These are some of the considerations when you save money:

1.       The cost of living is going up at a very fast rate. The price of petrol, food, school fees, water and electricity increase at an alarming rate. It is therefore very important when you save money to ensure that your money grows at a rate that is at least equal to the rate of inflation. Before you save money, you need to find out what the rate of inflation is. Currently, the official rate of inflation is 5.7% and this rate can be obtained from the Home page of the South African Reserve bank’s website and some newspapers. Source Shop around for a bank that will give you interest rate on your savings that is higher or at least equal to the rate of inflation. If you save at a rate of interest lower than the rate of inflation, your money will buy you less in the future than what it can buy you now. That could be why you are growing poorer even though you are saving.

2.       Make sure that you don’t pay too much in fees as you deposit your money into your bank. Depositing cash over the counter is very expensive. Putting a stop order or a debit order against your main account to automatically transfer money into your savings account is a better way to not only save on bank fees but also to ensure that you put away money monthly without struggling with the discipline issues

3.       Also try and ensure that you don’t withdraw the money too often as you are charged money each time you make a withdrawal. If you withdraw cash through a teller, you also pay higher bank charges

4.       Will you be able to get your money if something happened and you needed your money urgently? What penalties will you be charged for early withdrawal?

5.       Remember that generally, the longer you save, the more you earn in interest as you begin to earn interest on interest also known as compound interest. So aim to save for at least 6 months and more if possible

6.       Know what you are saving for as this helps you to have the discipline. As an example, I have saved money so I could buy furniture cash, I saved money so I could pay a deposit on my house and I am still saving for my daughter’s varsity fees.

7.       I have also learnt that if I were to wait until I have lots of money to save or until I have paid all my debts, I would never start to save. So I always start with a small amount of money and I increase the amount I save as time goes by.

I have done the “walking” for you to find out who is giving you good value for your money. Today, I want to focus on just one of the best places where you can save money. Buying Government retail bonds is so far still one of the best ways to save your money. This is because

1.       You don’t pay any fees, commissions, charges or costs when you buy Government retail bonds

2.       You also earn a good rate of return. Currently, you earn 7.25% fixed rate on a 2-year bond, 7.50% on a 3-year bond and 8.00% on a 5-year bond.

To find out more about Government retail bonds, read pages 102 – 104 of the book From Debt to Riches or phone National Treasury on 012 315 5888. The book has more examples on where else to save your money and earn good returns.

Article written by Phumelele Ndumo author of the book From Debt to Riches available at CNA, Exclusives, Adams and other leading bookshops for only R134 a copy.


Do you read Isolezwe? If so, look out for my articles every Friday in July

Should we pay cash for our weddings? Some of your responses (abbreviated)

Good day Phume

Oh my goodness what a realistic topic, I happen to be a victim of getting married on debt…The most unfortunate part for me is that I am no longer with that man, but I’ve seen my hard earned salary go to debtors because of personal loans and what a tough road it is to travel paying back money that one used so long ago.



Hi Phume

Just read your article on paying by cash/credit for a wedding and laughed! I relate. Every year my husband planned for lobola, budgeting to use his annual bonus, something always came up – could even blame the devil for it!
Now that we are married, my heart is no longer on the “big day big celebration” mode. The rationale is “I do not have the R200k to feed the masses for a day – if I had it, I would go ahead, but not when I still have to save for it. I’d rather save for the piece of land I want to build my bambino’s home on”. Lord knows I had attended enough wedding expos over the years to know the estimated costs! It boils down to the financial discipline principles that it does not make sense to save R200k to entertain the masses when I (cannot) have not saved it for my dream home. My short-term financial goals have been redirected towards saving for starting a family of my own.



Hi Phume,

Thanks for sharing your views on this topic. People will always place themselves in a financial den by wanting to throw lavish weddings that they cannot afford because they want to impress others. They forget one thing that people will not be responsible for the debt. People need to learn to live within their means. It does not make sense to incur debt over a one day or two days occasion and be in debt for a year. We need to encourage our people to pay cash for the weddings and be debt free after the wedding. That will grant them an opportunity to enjoy their wedding and not curse their wedding when they find themselves deep in debt.



I have planned enough weddings for the rest of my friends to have seen the worst and the best in spending. Those that use debt, also have the tendency to spend more because the “lump-sum” is readily available the same time the excitement and ego and the sense of wanting to outdo the last wedding you attended is at its peak. Whereas, if you saved up and used your own money, the sacrifices that you made, makes you very alert to how your hard-earned money gets spent. I also noted that even the most careful and financially educated seem to lose their sense when the wedding bells start ringing. Unfortunately, the decision to have a big expensive is more emotional and irrational and it involves too many people.

Wedding Planner


I see too many young guys having expensive weddings to impress everyone only to end up in debt. Our materialistic culture today has filtered not only into the cars we drive, but also in the weddings people have.


Warm regards



Phumelele Ndumo

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