Africa has, for a long time, been economically underdeveloped.
However, things are changing. New digital technologies and mobile phones are transforming people’s financial awareness and improving how they conduct financial transactions. There’s increasing interest in improving financial wellbeing, particularly when it comes to saving.
According to the World Bank, 54% of adults in Sub-Saharan Africa save money. This number also includes a significant number of African youths who save frequently.
Still, saving is not easy, and for good reasons such as low levels of disposable income, high levels of debt, and insufficient financial education.
The causes of poor savings levels are complex, and securing your financial future may sound intimidating, but there are some simple yet effective ways to improve your finances.
In this article, we’ll look at five money-saving hacks you can start implementing today to support your financial goals.
- Create an honest budget
Budgeting may not seem like a money-saving hack at first glance, but the fact is that you can’t save if you don’t know where your money is going. You need to create a budget, and the first step to doing this well is tracking your spending habits.
One of the best ways to track your spending starts with noting how much money you spend daily on essentials and how much you use on luxury expenses. This way, you can prioritize how you use your disposable income, allocating some of the extra money to savings before considering any luxury or trivial spending.
The process of tracking your spending and setting up a budget doesn’t have to be tedious. You just have to find tools that work for you. For example, you can set up a simple spreadsheet or use these budget spreadsheets and budget templates to get started.
If you like technology or you’re not one for inputting numbers into spreadsheets, there are several apps you can use to simplify the process. Some top ones include Mint, You Need a Budget (YNAB), and EveryDollar.
The best part? All these resources are free so you get to save some money.
But, remember that tracking your spending and creating a budget only works if you’re honest with yourself about your income and more importantly, your expenses. Only accurate information will help you support your financial goals.
- Save first, and save automatically
One of the hardest things about saving is putting some money away before you start spending. A lot of people often view savings as the money left after all the expenses are taken care of.
This is problematic, however, since for a lot of people, expenses always rise in line with income.
According to Parkinson’s law, “work expands to fill the time allotted for its completion.”
When applied to finances, the law says that no matter how much people earn, they tend to spend all of the money and a little more besides. That’s why for many people, the expenses keep increasing no matter how much income increases; there’s usually not much left to save, if anything at all, when one is done spending.
To support your financial goals, you need to break Parkinson’s law. You can do this by establishing limits, i.e., saving first and spending next.
An easy way to do this is to set up an auto-debit that secures a fixed savings amount as soon as you receive your salary. You’ll be able to put money away before any temptation creeps in, thus putting yourself in a better position to achieve your financial goals.
If you can’t set up an auto-debit, you could always try setting calendar reminders to add money to your savings before spending on any non-essentials.
Automating your finances will help you get into the habit of saving. Besides that, it will get you used to having a fixed amount to spend, and you will likely find that you can get by on it a lot more comfortably than you imagined.
- If you’re shopping online, see if you can get paid
Getting rewarded for shopping is an underrated practical hack for saving money.
And no, this is not just about promotions, special offers, and coupons. You can use rewards programs to earn back some money when shopping.
There are a lot of opportunities to earn while shopping all across the continent — South Africa’s Multiply, Kenya’s CashBackApp, and Nigeria’s ThankUCash platform are a few examples of the many reward programs available to African shoppers. You can earn cash back on your everyday spending such as groceries, airtime purchases, bill payments, and much more.
Additionally, you can capitalize on other financial products that are tailored to reward your digital lifestyle. For example, the Chipper Card offers 5% cash back on purchases.
E-commerce is booming in Africa and so is the personal shopping business model. Now is a good time to save some money when shopping.
- Try the ‘30 days’ trick every time you want to splurge
Impulse buying is an international problem.
In one global survey of over 2,000 shoppers, South Africans showed the highest likelihood of making unplanned purchases.
Enter money-saving hack number four; a simple psychological habit that makes you take your impulse purchases seriously.
With the 30-day saving rule, you give yourself at least 30 days (or 1 month) to decide if you should spend on something that isn’t necessary to your lifestyle. If after 30 days you still want to buy the item, you go ahead.
Put another way: if you see something you want but don’t necessarily need, you wait 30 days before buying it. If you still want to buy it after 30 days then you can go for it.
If you try the 30-day rule, you’ll probably find that you can easily live without some of the things you thought you needed. You can direct more money to your savings account as well.
It’s a win-win situation.
- Watch out for common expenses that add up
46% of Africans were subscribed to mobile services by the end of 2020 and Africa had a 43.1% internet penetration rate by December 2021.
Mobile and internet use are on the rise in Africa and seemingly normal expenses like phone costs can add up. It’s a good idea to note how much you spend on your phone and how you can reduce the costs.
For example, you can opt for cheaper phone plans, remove apps that use too much background data, or switch off your phone at certain times. All these changes can result in savings that add up over time.
Similarly, you can cut other expenses like your gym membership.
You can get into shape without gym equipment since lots of workouts have no-equipment alternatives. Think about how you can run outdoors instead of using the treadmill or how a sturdy chair can take the place of a workout bench? There are also several free apps on Play Store/App Store that are optimized for home exercising, especially since the pandemic.
Working out at home will help you save significantly on your gym membership every month.
Bonus hack: Improve your financial literacy
Financial literacy equips people with the knowledge and skills they need to manage their money effectively and support their financial goals.
Unfortunately, financial literacy levels are low in developing regions such as Africa; only 32% of the Sub-Saharan population is financially literate. Compared to the average 55% financial literacy rate in advanced economies, it’s easy to see why Africans are somewhat at a disadvantage when it comes to creating a solid foundation for financial success.
Although it may not look like a money-saving hack at first sight (similar to budgeting), improving your financial literacy is a good way to start managing your money well and investing in your financial security.
You can start your financial literacy journey by building a budget, reading some personal finance books, and checking out free resources like this beginner’s guide to investing.
That’s a wrap!
Supporting your financial goals is no walk in the park, but taking steps (no matter how small) toward those goals is what will make a difference.
By using these simple hacks to handle your money, you can start taking control of your finances and put your money to good use — like paying off any debt, investing, or just beefing up your savings.
You can also add to your savings by minimizing transfer costs when sending or receiving cash. Download the Chipper app today on Android or iOS and enjoy fast and free transfers across Africa.