Meet 25-year-old Ntando Nkosi. He is a romantic who knew from a young age he wanted to find a soulmate. So, at the tender age of 22, he started saving for lobola, using his travel savings as a base. He reached his target of R40,000 in just three years, by taking advantage of compound interest through a savvy savings plan.
Lobola, or bride price, is a tradition practised by many African cultures to celebrate the matrimony of two individuals and joining of their families. Negotiations can take days – or months – and the exchange commonly takes the form of the groom’s family gifting the bride’s family with money. This sum is predetermined during negotiations. It can range from R500 to R500 000… so when’s the best time to start saving?
Nkosi says as soon as possible.
“I was a 22-year-old who had just bought my first set of wheels and I was slowly thinking of my next acquisition: a house. I knew I wanted to share this kind of asset accumulation with a partner. So, I decided to start saving for lobola. That’s how my father did it and that’s how my brother did it so my thinking was heavily influenced by that.”
Having a benchmark or clear plan of action for saving isn’t as easy as it sounds, however. Below, Nkosi gives top tips for best practices when saving up for lobola:
Tip 1: Get an early start
Lobola is much like buying a house in that you need a very large sum of money in a very short period of time. If you are marriage-minded early on, then start saving as soon as you can. Lobola ranges considerably depending on factors such as age, financial standing, the stage you are at in your life, etc., and can lead to serious debt if you’re not prepared for it when the time comes.
Tip 2: Family insights are a firm foundation
Your family is the best place to start when it comes to knowing what and how to save. I found that talking to my father and brother helped me know what sum to aim for and savings vehicle to use.
Tip 3: Maximise your savings
Putting away R1,000 monthly into a flexible Capitec savings plan over 10 months will accumulate into R10,475 – which is 4.75% more than the R10,000 you would have saved in a normal savings account. Move that over into a fixed-term savings account for a set period of time, with up to 8.55% interest and it could grow to over R35,000 over 24 months. Use the savings calculator to plan the ‘how much’ and ‘how long’ aspects easily.
Tip 4: Cut down on spending
Get up close and personal with your spending habits. Firstly, interrogate your income and expenses; be realistic as to how much disposable income you have after you’ve settled necessary expenses and adhered to your savings goals.
Next, take a deep dive into your bank statements over the last year. Where does your money go exactly? And how can you cut back on non-essential spending? The classic example of cutting back on coffee is always a good idea. Another top tip is to switch to a bank with low bank fees. Small savings like these add up.
“Saving for lobola boils down to maintaining healthy money habits,” concludes Nkosi. “Make saving a habit by setting up a monthly recurring payment from your transactional account to your savings plan when you receive your salary. Remember the first rule of wealth creation is to pay yourself first before you spend your money elsewhere.”