It’s no doubt that the current economic state of this nation is seriously compromised. A lot of people are unemployed, whilst those that are employed or engaged in business activities are getting low or inadequate incomes. Therefore, most people aren’t even contemplating saving since they see it as a fruitless endeavour given their low incomes. However, saving can never be overemphasized since it offers you financial security and a safety net for emergencies arise.
Due to the unpredictable nature of our economy it’s apparent that many unforeseen circumstances can come in your life. Saving will definitely ensure that you are better prepared for such scenarios and reduce the likelihood of getting into debt. Notably wealthy people always underscore and are huge proponents of saving as an important aspect of financial well-being.
The idea of saving entails establishing an emergency fund. Save before spending rather than vice versa. In order to save effectively you need to know how much you earn and how much you spend; evidently, this means budgeting and operating within the confines of a budget is imperative. Here are some tips to note in your quest to build savings:
Devise A Budget & Stick to It
As I pointed out earlier it’s important to consider how much you earn and how much you spend as a starting point. This will help wisely inform your decision on how you will develop your savings plan, as in, how much to save and over what time period.
Make Saving Automatic
Saving can be so easy if you make it passive. For instance, you can have your employer redirect part of your income to a different account or any other recipient responsible for your savings. This then means that you won’t have the burden of having to first handle the money and then exercise discipline in putting it in your savings chest yourself. Basically, explore from many possible ways in which you can make the saving process automatic & passive.
Make Your Savings Goals Short-Term
This can be, for instance, setting aside $50 per week. The mind hack is that it’s relatively easier to implement & achieve goals that are short-term. Having long term goals entails longer periods of realization, higher amounts & higher stress on your discipline and determination thresholds.
Use Windfalls as Significant Avenues of Savings
Windfalls refer to things like bonuses, competition prizes, financial gifts etc. When you get such usually unaccounted for financial injections, channel greater portions of them to your savings. The usual temptation is to spend windfalls as you consider them as expendable monies, but be frugal and beef up your savings with these.
Plan Your Savings Regime & Approach
It’s always important to plan and then follow through with execution. Beforehand, plan how much you intend to save, in what time frames and through which avenues. It’s wise to placate the amounts as percentages of income e.g. 10% of net income. This will make it easy for you to monitor and control the whole endeavour, making changes where necessary.
Loose Change Is A Great Savings Avenue
This might seem insignificant but this simple approach can grow to significant savings over time. You can create in yourself a culture of setting aside all loose change whenever you make purchases.
Give Due Thought Before Making Purchases Of Non-Basic Items
The crux here is to ward off impulse buying. This helps you ensure you have extra money that you can direct towards savings. Give yourself at least a day to think through before making a purchase for non-basic/non-essential items. People apply different rules in this effort e.g. 24 hour rule, 30 day rule etc.
Look at an Item’s Cost in Relation to Your Hourly Income Rate
I will give an illustration. Suppose you are an employee somewhere and your net salary is $384, whilst working 8 hours a day, 6 days a week. This then means that you work for $2 per hour. Suppose you are contemplating buying a $60 watch. The question you will then ask yourself is, is this watch really worth 30 hours of my work? This will help you make better & wiser purchases that promote a savings culture.
Have Savings Reminders
The truth is saving is alien to most people and thus, creating a culture of saving can be very difficult. You might find yourself completely forgetting to save because you are so used to not saving. Therefore setup reminders on, for instance, your phone, sticky notes on your PC’s desktop etc. This conditions you to always be savings-conscious.
Start Saving Up For Children Before They Are Even Born
Most people struggle financially because of the strenuous demand placed on their finances in their quest to fend for children’s education. The welfare of children can be the single most significant consumer of parents’ incomes. Therefore starting to save for children before they are born will ensure starting early thus there will be less pressure & less amounts to set aside. Consider this illustration: saving $50 monthly for an unborn child will result in over $3600 being available before they start their first grade in primary school.
Just Saving Can Be Hard, Save FOR Something
This inspires you to be motivated and determined to achieve a specific and well defined goal. As indicated in the preceding tip, saving for something specific gives you the zeal to see to it that you achieve the goal. Specifics can be child’s education fund, wedding fund, saving up for a car etc. If you just save without specifics, you can fall prey to the temptation to spend the savings after some time.
Get Rid of Rarely Used Items
Premised on most people’s predisposition to buy things impulsively, people end up having a lot of unused or rarely used items lying around. You can take an inventory of things you have and sell off rarely used items and channel the money towards savings.