The SA economic climate has been volatile for the past few years, worsened by the Covid-19 pandemic. With rising inflation rates, fuel hikes and high unemployment rates, stretching the penny has become difficult for ordinary South Africans - making budgeting almost impossible. On the contrary, the uncertainty necessitates great financial planning and budgeting. Saving the penny should be a lifestyle and not an option, even during harsh economic times. However, financial literacy is paramount to a healthy saving lifestyle. It aids with better financial decision-making and planning and releases financial distress.

People often ignore the topic as many believe it implies stringent budgeting, and frugal living. They may even feel overwhelmed with the lack of financial knowledge, not realising that will empower them to reach their goals. The culture of financial planning and budgeting needs to be entrenched at an early age to avoid hindering financial freedom in the future. South Africans are among the worst savers in the world and just a small percentage can retire at similar living standards to before. This highlights the importance of budgeting and financial planning.

You can easily save on your monthly expenses by investigating where money is going. Basic things to lower expenses and increase savings are: Cancelling unnecessary subscriptions; planning your menu and grocery list, to save by eating at home and reduce food waste; having `no spending` days; lowering travelling expenses; using rewards programmes; and automating savings to a separate account. David Bach, an American writer, came up with the latte effect to illustrate the influence small, frequent purchases have on your bigger financial picture.

 If you spend R27.40 daily, it adds up to a tremendous R10 000 per year. The 10 0000 is not even taking the long-run magical effect of compound interest into account. These expenses include things like takeaways, cigarettes, coffee, and unnecessary banking costs. Budgeting and limiting expenses does not mean saying goodbye to your beloved daily cappuccino, limit it to a weekly spoil. Anything too restrictive will set you up for failure if there is no treat now and again. Budget for the things you enjoy the most. As soon as everyday expenses are under control, it will be easier to start saving for retirement and large purchases such as property. The first step is always the toughest, but when expenses come up and you can pay them without a struggle, you will find the motivation to continue. There is a difference between saving and investing. Usually, there is no big return with savings. It is for short-term goals. Investing is when you want your money to start earning more money. This will be in unit trusts, retirement funds, etc. A great long-term investment is the Tax-Free Investment Account, available on many platforms such as EasyEquities. Financial knowledge is power and can buy you peace of mind. The journey to financial freedom starts with you.

This article first appeared in the Sowetan newspaper on 24 March 2022. Elda Du Toit is an Associate Professor in the Department of Financial Management at the University of Pretoria and a Financial Accountant. Lindie Van Gass is a University of Pretoria commerce graduate and founder of bankbeter.co.za.