Now Is The Time To Multiply Your Emergency Savings Efforts

Financial experts, money gurus, and possibly even those closest to you, have emphasised the importance of a “rainy-day fund” for decades. But today, as we face the Covid-19 pandemic and the ensuing economic fallout, it is more important than ever to have an emergency savings fund.

The reality in South Africa, however, is that only 55% of financially well households have savings to access in case of emergencies, according to the Momentum Science of Success 2018 Report. Luckily, it is never too late to start saving for a rainy day.

Kim Mopelong, Head of Savings and Channel Integration at Momentum Multiply Transactional Banking, shares some tried and tested tips on having a little extra towards any emergencies:

1. Easy-to-access at short notice

Firstly, ensure your emergency fund is easily accessible because emergencies, by definition, will happen when you least expect it. Choose a savings vehicle that is fairly liquid, and allows you access to your money at short notice, with minimum hassle and waiting period to receive your funds.

2. Minimum exposure to economic volatility and shocks

Capital protection is critical during times of economic uncertainty and market volatility. “Emergency funds should therefore be invested in a low-risk savings vehicle that protects your capital, meaning you are to a very large degree not exposed to market volatility such as for instance stocks or equity funds”.

“At the same time, to ensure that emergency funds continue buying at least the same amount of goods and services, it must grow by more than price increases”, she adds. “This is why the Multiply Money interest rate is linked to the prime interest rate, which normally is higher than the consumer price inflation rate”.

3. Choose a vehicle with minimum fees and equitable return

Earning a decent interest rate is meaningless if excessively high fees are eroding your savings. “As emergency funds do not need to be actively managed, they should be kept in vehicles that charge fairly low fees. Multiply Money charges no monthly fees on the savings wallet, making savings more valuable for clients”.

4. Multiply the good things you are already doing

An easy way to generate additional savings from your everyday expenses is to make use of Rewards programmes. By making small adjustments to your choice of Retailers or spending behaviour, you could earn Cashbacks, access cheaper, exclusive deals and specials and qualify for discounts on the items you are already spending money on.

The Multiply Money Saving wallet - a free benefit available to Multiply members – is a great vehicle to save and grow your emergency fund, providing an interest return on your savings, from the first cent. Clients have immediate, convenient access to spend their savings using the Multiply Money App, Multiply Money Card and the Multiply Online Shop.

Funds also accumulate through cashbacks earned at Multiply Partners and clients can increase their savings by transferring money from another local bank account.

Mopelong believes South Africans need to start thinking differently about traditional savings practices, including the use of traditional bank accounts. “One of the lessons we can learn from this pandemic on our personal finances, it the importance of being prepared for anything. The truth is that we do not know how long this crisis or the accompanying economic uncertainty will last. All we can do is hope for the best, but prepare for the worst,” she concludes.