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The Cornerstone of Saving

“The budget is not just a collection of numbers, but an expression of our values and aspirations.” – Jacob Lew.

The cornerstone of saving is figuring out what your goals are, figuring out what your time frame for those goals are, and working backward from there.

We all have multiple goals that we need to save money for, but most people just lump everything together into one savings account.

What happens when you want to start saving?

First: Start an Emergency Fund

This is like cash in hand but in a savings plan account. You can use that money in case the unexpected happens – like you losing your job, or falling sick and ending up with a big hospital bill.

If you don’t have any dependants, your emergency fund should be 3 to 6 months of living expenses. If you have dependants or if you work in a volatile industry, you could extend it to 6 to 12 months.

The benefit of having an emergency fund in a savings plan is that the money will be growing at a steady pace until an emergency arises.

Second: Anticipate Your Future Costs

Eventually, your car will break down, will need repairs, and someday it will need to be replaced. This shouldn’t come from your emergency fund but from a specific fund that you have set aside towards repairs and replacements.

Even if you don’t have a car, your home is full of furniture and appliances that will also eventually need fixing and replacement.

Third: Invest for Retirement

These are the two most important facts to remember about retirement:

  1. The younger you are, the less you will need to save monthly and your benefits will grow faster over time.
  2. You will never be younger than you are today.

Enough said. The best time to start saving for retirement is when you get your first pay cheque.

Fourth: Think Short-Term, Mid-Term and Long-Term

You should direct money based on whether you are saving for a short-term goal (1-3 years), mid-term goal (3-5 years) or long-term goal (5 or more years).

Regardless of the term, the Zimele Savings Plan can be used as it offers competitive returns in the short run and compounded interest over the long-term.

If you don’t have a specific savings goal in mind, try dividing your savings equally among all three-time frames, but only do this after you have completed the above three steps: building your emergency fund, anticipating your future expenses, and maximizing your retirement savings.


In the end, the best approach is the one that works for you.

The reason or motivation for saving money is the financial goals or needs that make an individual save on a regular basis.

Targeted accounts also make it easier to visualize progress. When money is lumped into a single account, it’s tough to know how much more you need to reach a particular goal.

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