Many people find it hard to save money because of various reasons that are peculiar to them.
You may be saying “but saving money is so difficult!” I totally get your point. However, saving money is a necessary skill you need to survive.
It’s like making a pot of jollof rice and you have just rice and groundnut oil, it certainly won’t end up as jollof rice. You need to have all the ingredients before you can make a pot of smokey party jollof rice. The same applies to saving money. You need to have all the “ingredients” to have a healthy saving journey. In today’s blog post, we will be sharing some secret ingredients that would help you save up money.
Ready? Let’s go!
First things first, you need to have a:
You need to outline what you need the savings for. So why are you saving? Is it for an emergency fund or you need it to purchase something or you need it to invest and so on.
A goal helps you stay consistent and be disciplined on your saving journey. Your savings goals can be long term like saving for your retirement, raising capital to start a business, or they can be short term like saving money to buy a car, pay your tuition fee, and so on.
Once your first “ingredient” is in place, then you need to have these:
You need to always have a budget for your monthly expenses. Where does your money go? What do you spend the most money on? Make a list of your monthly expenses and see if there is anything you are spending so much money on and cut the cost.
Try to cut back on purchasing things you don’t need and set the savings aside for your goals. You might spend (or save) some of this leftover amount immediately on short-term goals or add it to your long-term goals.
A budget helps you know how much you can save or spend depending on your income. You can even use apps to create personal monthly budgets and track your expenses. We shared some free apps you can try here.
3. Savings Plan
Having a plan allows you to take note of the monthly expenses and not just how to cut but what to do to cut it. The savings plan also has a target included in it. That is how much do I need to have to reach my monthly and yearly savings goal. It also answers how do I get the money needed to reach my goal? This question allows you to think beyond your salary or wages. It makes you ask what else you can do to meet up or increase your savings expectations.
4.Treat your savings as a bill to be paid
Many people think of solving all their needs and sorting expenses before savings. By the time they are done taking care of their expenses, there is little or nothing left to save. Don’t be like them. The best way out of this is to treat your savings as an electricity bill or your house rent that needs to be paid. Treat it as if it is an electricity bill or your monthly rent that needs to be paid.
5. Spend less than you earn
Build the habit of spending less than you currently earn in a day, week, or month.
Avoid overspending and stick to your budget. Make conscious efforts to reduce your purchasing power. Here’s a hack that works for many people (myself inclusive), when you desire something, don’t buy it immediately. Wait for a day or two and see if you still desire it. Chances are that you’d have realized that it was more of a NEED than a WANT. This is called Delayed Gratification. It helps you separate immediate needs from wants.
6. Avoid Debts
Flee from all appearances of debt! Avoid buying things on credits. Do I need to say this louder with a megaphone, maybe? If you can’t afford it then don’t buy it. Debt is an enemy of savings because you end up putting half of your income into paying off the debt. Sometimes, these may take years to pay off which is why you need to avoid them.
However, if you are already knee-high or neck-high in debt, you need to set up a Debt Management Plan and pay in installments till everything is paid off. You can dedicate a certain percentage of your income that goes into this plan monthly, quarterly, or annually.
These secrets ingredients separate those who end up with no savings and those who are successful in saving money. Which one are you? Team Savings or Team No Savings?