SIMPLE STRATEGIES TO SAVE MORE AS TO INVEST MORE Saving is a skill which many want to learn, but only few succeed at it. Personally, I previously found it very difficult to save. I know I was making money, but I was not having money. It gave me great concern, coupled with the fact that I cannot get ahead in life financially if I cannot save part of what you earn. This prompted me to learn the art of saving. Thankfully, with active discipline, I achieved it. It is now part of me and I can comfortably save any amount I wish for any purpose without affecting my lifestyle. Saving is a habit, and like any habit, it can be learnt by diligently practicing it. If you have made up your mind that you will have to be saving money due to the embedded benefits, the first thing you have to do is to analyze your monthly income and expenses to know where your sweat is going to. If you have a leaking drum, no matter the quantity of water you pour into it, it must leak away. So the best you can do is to patch the leakage before you begin to pour water into it. The same is applicable to saving money. If you do not know where you are spending your money, you might not know how to curtail your spending and so cannot squeeze out the one you will save. So you have to check how much you make in a month and how much you spend in a month. If your expense is equal to or more than your income, you are ultimately going to retire poor; there is no two ways about it. After checking the volume of your income and expenditure, you need to carefully track where you spend your money every month. If you do so carefully, you will eventually find out what is draining your money and find ways to curtail it. Spending on food, clothing and shelter is essential. But you might discover that much of your expenses might be going to unnecessary things. Those are the ones you need to curtail. The problem people have is the ability to call unnecessary things unnecessary. Being sincere to yourself in this evaluation will help you; after all, the money you will be saving will still be yours, so you are doing nobody other than yourself any good by saving your money. You should understand that if you spend more than you earn, you will be poor in life; if you spend the same amount you earn, you will continue struggling in life; if you spend less than you earn, then your chances of retiring rich are high with wise planning. So after you have analyzed where your expenses go to and made resolutions to curtail them, use the strategies below to help yourself in your new resolution to save more money: BUY IN BULK WHENEVER POSSIBLE Buying in bulk is always cheaper than buying single items. You can therefore save little money by buying some inevitable household stuff used often in your house. These include: soap, food items, etc. PRICE-CHECK BEFORE BUYING EXPENSIVE THINGS It is not an act of “big man” to buy at whatever price you are told at the market without bargaining. Haven’t you noticed that rich people bargain the most? If they do, how can you that is aspiring to be like them not bargain even more? In short, when you want to buy expensive things like gadgets, fashion, etc, be sure to check other shops to get better deal. Be sure to price anything you want to buy before paying, you can save some money through this way. But don’t become a comedian by going to price items with fixed prices like a bottle of coke or recharge card. MAKE MONTHLY BUDGET AND AVOID IMPULSE SPENDING If you are serious on saving more money so as to invest more, you should plan your monthly budget according to the income you receive. If you are married, it will be wise to plan it alongside your partner if he or she is an understanding one. If you don’t plan with your partner, there could be the possibility that your partner might pressure you into spending on what you never budgeted for since they are ignorant of it. But when you do it with them, they will help you in no small way to stick to it. When you have made your budget (remember to make provision for savings), it is important that you don’t spend impulsively. Whenever you enter the market, there are things that might just catch your fancy and you might be tempted to buy it even though you never planned to. If you succumb to the temptation, then you have thwarted your plan and that will affect other parts of your budget, especially your savings. If you see something you love and must buy, fix it into your next month’s budget and buy it then. Discipline is key to succeeding with savings. BUY GENERIC HOUSEHOLD PRODUCTS RATHER EXPENSIVE BRANDS Why spend N500 to buy a single soap because it is classy and expensive, when you can get a N100 one that will do exactly the same thing that the N500 type will do? Most of the big branded products we grade as class are just over-hyped and can do no more than generic ones can do. It is just packaged for the very rich people who have much money to spare. For example, what is the difference a bottle of Joven and a bottle of Hennessey? The difference is just that Hennessey is over packaged, over hyped and overpriced. Trying to spend money on expensive brands just to show off is really a show of folly. An Igbo adage says: “onye ekowekwala akpa n’ebe aka ya agaghi eru” Meaning you should cut your coat according to your size. DIFFERENTIATE BETWEEN YOUR NEEDS AND YOUR WANTS Most people misplace their wants for their need. Your need are the necessary things that you can’t go without. They are essential for living. For instance, you must eat food, live under a roof, wear clothes, train your children, etc. But wants are those things that are not really very important, but you earnestly desire to use them either to upgrade your status or show off to your friends. These include buying costly jewelleries, expensive cars, luxurious apartments, latest technological gadgets, etc. Most times when we come by money, many of our wants tends to appear like a necessity to us. If we blindly follow it, then we may end up spending on it and thus have nothing to save. If you cannot do without any particular accessory, then find a generic one that can perform what you really need. My advice is this: let your salary (earned income) buy what you need and let the profits you make from your investments (passive income) handle your wants for you. OPEN AN INDIVIDUAL SAVINGS ACCOUNT (ISA) Aside your salary account, you should have a savings account where all the money you save should go to pending when you want to invest it. To make it easier for you, you can request a standing order from your bank to deduct a particular amount from your salary account every month and deposit it into your savings account. You can also request that they block that particular account from withdrawals till a certain period of time. That way, you will save yourself the temptation of overspending your income and having nothing to save. Aside having a savings account, you should also have an emergency account to take care of eventualities. You could have your salary account do this for you by always leaving money behind in it. Try to accumulate money in it that can serve you for at least three months assuming your income ceases for any reason. This will help you stick with your saving philosophy. JOINING A CONTRIBUTION GROUP The more traditional way of saving money is to join a contribution group (Isusu). People with a common interest, example, businessmen, civil servants, etc. do contribute money daily, weekly or monthly as a form of savings. Depending on their agreements, they receive their total contributions at the end of the year or they rotate it among members. With a good legal back-up, it is a good way to save money. Remember that when you receive yours, you are not to go into a spending spree. It is for you to either push it into your ISA or invest it. I will talk about investments in subsequent editions of this column. Saving money is one of the ways of acquiring wealth and is advised for all and sundry. Before I conclude, I want you to know that saving money in the bank should not be your source of investment as money in the bank rarely grows. Saving money in the bank should serve as your means of accumulating money that will be channeled into more profitable investments. NUGGET How much have you been able to save since you started work? If you have little or none, now is the time to start saving. Save as much as you can and with my investment information coming up soon on this page, channel it to a good investment vehicle.
Posted on: Fri, 09 Aug 2013 18:20:39 +0000
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