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Research has shown that, when compared to older generations, millennials - those currently aged between 18 and 34 - are good savers.
However, when it comes to long-term investing towards retirement, millennials are not doing so well, with only 44% saving for retirement via an employer pension or provident fund, says Noluyolo Betela, client relationship manager at Allan Gray.
"This is a sobering finding when you consider that approximately only 6% of South Africans, who are currently employed, will be able to retire comfortably. The rest will likely have to keep working past retirement age or rely on a meagre government pension," says Betela.
Yet, with careful planning and small sacrifices, millennials can develop a lifestyle of saving that will make a big difference.
Here's how to tackle the 5 biggest excuses millennials make for not saving, according to Betela.
'I don’t have enough money to save'
Saving has nothing to do with how much you earn, but everything to do with the percentage of your income that you spend.
Whether you make R4 000 or R40 000 a month, the only way to save is to spend less than that amount.
Take the monthly decision out of your hands by setting up a debit order. If spending is your problem, you should find a strategy to help you bring it under control.
'I have too many expenses'
Many South African millennials are first generation middle class in their families, and a large portion of their expenses goes towards playing asset catch-up like buying cars, homes and even household appliances.
The reality is that many end up in debt as a result.
Exercising patience for the things you want will help you to avoid the tyranny of credit. In the same way that compound interest can do wonders for your investments, it can also dramatically increase the amount of money you end up owing the bank or a financial provider when you take out credit.
'I have to take care of my family'
Research has found that as many as 70% of South Africans working in the major cities are supporting family members or believe they will have to in future.
Sit down with your financial dependants and give them a clear picture of your finances. This will set clear boundaries and help you to manage their expectations – and your budget.
'I don’t have access to a pension or provident fund'
You don't have to rely on an employer to save towards retirement.
If you are an entrepreneur or a freelancer, you can use a retirement annuity (RA) to save on your terms.
'I can start later'
Procrastinating can seriously derail your goals and plans.
Say you wanted to have R100 000 in 10 years, and you began saving today, you could achieve this with R500 a month.
If you delay for five years, then you would have to put away R1 300 per month to achieve your goal in time. This is because the earlier you start, the better, as you let compounding do most of the heavy lifting to reach your financial goals.
