Saving for beginners
Saving money is putting money aside or deferring the use of such funds. Money can be saved by putting it aside in specified accounts such as Savings, Pension or Investment accounts or even in a piggy bank, as long as it is not consumed.
Savings is the foundation for financial wealth because funds are drawn from it to provide for investment, be it business, educational or personal.
Saving is not easy but to achieve any form of investment, (except where you are from a wealthy home and there is a trust fund set up for you) you’ve just got to get your budget on track.
Saving is not a quick result process, it requires patience and self control, below are some tips for savings
- Track your spending by writing everything down: I had to buy a small hard cover notebook to write details of my spending. It wasn’t an easy process and sometimes I forget to jot them down but at the close of work I go through my list to add any one I might have forgotten.
By the end of the week I was able to identify areas of my spending. Some though singularly small, but when added together I realized how large they were.
They were items like refreshment for friends and colleagues, Cinema tickets, Ice-cream outings, airtime credit, Dstv that I never watched, uncapped wifi, monthly gym fees and so on.
In total these items exceeded One Million Naira per year.
- Do a budget list: Use the expense notebook to prioritize all spending into needs and wants. All necessary purchases are listed out and a budget created per month or as the frequency dictated. This list must be adhered to completely.
This exercise can be done on a short term to avoid discouragement. The timing could be as short as a week or a month but I notice after this period the desired item that aren’t necessary would probably be forgotten.
- Open a separate savings account for the purpose of savings: This account must be inaccessible to spending, meaning it will not have an ATM card or Mobile app. Banks have savings accounts with high interest rate, with the help of your banker choose such accounts with the best interest rate possible.
- Set a future saving goal: The action plan of steps 1 to 3 will be a guide in setting an actual saving plan. A short/medium plan goal may be set on how much is intended for savings each month for a period of time. This will set out how much would have been saved within the planned objective.
- Instruct the bank to transfer a specified amount from your salary/income accounts into the savings amount on a monthly basis: This removes the temptation of deferring your savings manually every month. This gives you time to think and we all know the temptation that comes with the ‘spend or save’ dilemma.
- Set out time to give yourself a treat: Just like watching your weight, it’s advisable to give yourself a treat. This could be a once monthly or a bi-monthly reward system.
- Start today: Last but not least, do not wait till tomorrow, start today!