Setting money aside as savings is a habit that needs to be developed. If you want to see your savings grow, you need to do what you can to encourage a savings habit. Setting money aside needs to become a way of life, instead of some sort of burden. Most people want to save more money, but without a solid plan and good habits, it’s easy to fall short of your financial goals. Life interferes, money slips through the cracks, and before you know it, the end of the month has arrived, and you’re no closer to saving than when you started.
Here’s how to go about establishing habits of saving more money so that it becomes second nature. By focusing on small wins, making automatic deposits, and resisting the temptation to “borrow” from yourself, you can get on the path to financial stability. If you are having trouble on how to save money, you should try these easy ways to keep you motivated;
Track your expenses
The first step to start saving money is to figure out how much you spend. Keeping track of all your expenses—that means every suya bought, uber/danfo fare and cash tip to your favorite waitress.
Once you have your data, organize the numbers by categories, such as gas, groceries, rent, and total each amount. Use your card transaction history and bank statements to make sure you’re accurate and don’t forget any. Remember, every naira counts.
Save yourself some bucks by looking for a free-spending tracker to help you get started. Choosing a digital program or app can help automate some of this work.
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Make a Budget for savings
Budgeting doesn’t have to be centered on expenditure alone! As a matter of fact, your savings should be the first item on your budget. Once you have an idea of what you spend in a month, you can begin to organize your recorded expenses into a workable budget. Your budget should outline how your expenses measure up to your income, so you can plan your spending and limit overspending. Be sure to factor in expenses that occur regularly but not every month, such as generator/car maintenance. Always remember to include a savings category in your budget, aim to save at least 10 to 15 percent of your income.
Cut down on your spending
This is word to the ‘’My expenses are so high I can’t even save’’, ‘’I have to send money to my folks, pay school fees, sort grand ma’s bills etc’’ like the popular saying goes, set awon first born. smile, we have you covered okay?
If your expenses are so high that you can’t save as much as you’d like, it might be time to cut back. Identify nonessentials that you can spend less on, such as entertainment and dining out. Look for ways to save on your fixed monthly expenses like cable tv bills and your cell phone, yes, your cell phone, have you bothered to check how much you spend on airtime and data? Turns out you may want to cut down on Twitter and IG videos.
Here are some ideas for trimming everyday expenses:
- Utilize community event listings to find free or low-cost events to reduce entertainment spending. Instead of paying N20,000 for that super star-studded show, why not attend the NGN 5000 event?
- Cancel subscriptions and memberships you don’t use especially if they renew automatically eg, Netflix, LinkedIn, etc
- Commit to eating out only once a month and trying places that fall into the “cheap eats” category.
- Give yourself a “cooling off period”. When tempted by a nonessential purchase, wait a few days. You may be glad you passed or ready to save up for it.
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Priority is key
After your expenses and income, your goals are likely to have the biggest impact on how you allocate your savings. Be sure to remember long-term goals, it’s important that planning for retirement doesn’t take a back seat to shorter-term needs. Learn how to prioritize your savings goals so you have a clear idea of where to start saving. For example, if you know you’re going to need to replace your car soon, you could start putting money away for one now instead of planning for later.
Automate your savings
You know you will eventually have some unplanned expenses to sort out before the month comes to an end, instead of taking out of your savings before getting the time to go deposit in your savings account why not automate your savings?
Almost all banks offer automated transfers between your checking and savings accounts. You can choose when, how much and where to transfer money or even split your direct deposit so a portion of every paycheck goes directly into your savings account.
Decide your duration
Don’t just save because this article urges you, make a conscious decision on how long you want to save. The traditional model of just saving without a definite duration is so spent, there are multiple savings options in your bank you can utilize. Your duration can be dependent on the reason for saving. If you’re saving for short-term goals, consider using these options:
- Savings account
- Certificate of deposit (CD), which locks in your money for a fixed period at a rate that is typically higher than savings accounts
For long-term goals you can consider:
- FDIC-insured individual retirement accounts (IRAs), which are tax-efficient savings accounts
- Securities, such as stocks or mutual funds. These investment products are available through investment accounts with a broker-dealer.
Set Realistic Goals
Saving money often means making sacrifices, and it can wear you down after a while. If your self-imposed restrictions on spending are too strict, you may be setting yourself up for failure. It’s like going on a really strict diet; if you deny yourself for too long, you may snap and undo all your good work.
Set up an occasional reward for yourself. For instance, if you have a long-term goal of saving NGN 1,000,000 and that means giving up that daily chicken and your monthly happy hour with friends, set mini-goals along the way. Once you hit NGN 500,000, reward yourself with that peppered chicken you have missed so much, or visit happy hour for the first round of drinks but don’t do both. There’s no reason saving money must be a completely miserable experience, and by giving yourself small rewards, you’ll reinforce the idea that you’re doing something that will, quite literally, pay off in the end.
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Savings are essential and important for the future, but you need to find ways to keep yourself motivated. Stick to these simple ways easy to follow steps and watch your savings soar in 2020!
stick to these easy and simple ways to save money