Cultivating the habit of savings is a very important one; this habit can help you in many aspects of life.
A good saver can save out funds for business; a good saver is debt free; a good saver has already made a right and bold step to financial freedom and a good saver can reach certain goals that can’t be ordinarily attained with the limited revenues he gets.
According to www.financialgazette.co.zw, cultivating a savings culture is always ideal, but it’s never easy. Savings entails starving yourself off certain wants and pleasures, and that takes a lot of discipline. Many people want to save, many people wish they could save, but just a few save at the end of the day.
Cultivating good savings culture will definitely affect your spending habit as well.
There are certain ways you can cultivate a savings culture.
Assess your financial health
The first major step to savings is assessing your financial health; this would help you know the direction you’re headed and how to get there. You need to have a clear picture of your income and expenses; you need to know what takes the bulk of your money, and also try to ascertain whether you’re spending more than you earn. When you have this figured out then you can move to the next step.
Have a budget
Having a budget would help guide you on what you ought to spend your money on and what you shouldn’t. With a budget, you would know your needs and wants and have a clear picture of how to cut down on spending on your wants. Wanting to satisfy your wants would make you unable to save. A budget would help you plan better, save better and cut down unnecessary expenses.
Keep track of your spending
Your spending habits would determine if you would be a successful saver or not. Keep track of your daily lifestyle and what you spend your money on. After assessing where your money goes, look for ways you can minimise how much you spend.
Have a target
The best way to save is having a target; saving without a target might not keep you motivated, but saving for a target keeps you motivated and focused. Have a realistic goal and save towards it.
Be debt free
Try as much as possible to live a life free of debts. Manage your finances judiciously and avoid having to collect loans. Live according to your budget; this would help you in the long run.
Save for emergencies
Emergencies happen all the time; this is something we have no control over. The best way to handle emergency is to save, so you won’t be left out of the dark. Set about five per cent of your income monthly to save for emergencies, so you wouldn’t be left in the dark when the situation arises. Your emergency savings should be different from your normal savings.
Pretend you are paying off a loan
The best way to frame your mind-set towards savings is to pretend you’re paying off a debt. Continue making the monthly payments into your savings account. Even after you reach your set goal, never stop this habit.
Set your mind towards saving
Having your mind geared towards saving would help you save better. Also, if you notice you still have money left at the end of the month, rather than spend it unwisely, the best bet is to save it. This would help you reach your goal faster.
Set a fixed percentage
The best way to save is by setting a fixed percentage to be saved monthly. This way, when your income increases, your savings would increase as well.
Try to avoid gathering and friends that would give your saving a setback
Friends are important, but when you have friends that won’t let you save, it’s best to minimise the way you see them. Gatherings and friends that prompt you to spend money won’t only kill your savings but might even push you to spend above your earnings. www.elcrema.com
Four ways to maintain proper savings culture
Most good savers have a good understanding of their expenses, know how to control them, are good at saving money, and know how to resist upgrading. Successful people usually follow four steps to prepare for and complete their goals. Let’s look at each step and how we can apply it on and off the long distance trails of life.
Know your expenses
First, you must know your annual expenses. Add up the amount you spend every year on all your major expenses, such as rent/mortgage, telephone, clothes, education, utilities, entertainment, transportation, fitness centre, and booze. There are software programs (e.g., Quicken and MS Money) that help you figure out your annual expenses, and for the frugal, there are free financial web sites (e.g., Finance Yahoo! and MSN Money) as well. The super frugal can get by with just a pencil and paper! It doesn’t matter what method you use, and you don’t need an MBA or a CPA to figure this out. Just get a rough idea. Are you spending N3m a year?; N5m a year?; N10m a year?; N20m a year?; or just N200,000 a year?
Continue to save despite the odds
Armed with that number, you can determine when it’s safe to summit. The more cash you have stowed away, the better you will weather downturns. How much cash is enough? The last recession in Nigeria lasted for 15 months. Therefore, saving a year’s worth of expenses will provide a sufficient buffer to weather nearly any recession. Once you have that level of protection, you can confidently adopt upgrades, as long as you maintain that one-year buffer. You can summit without fear. As a result, you will have the freedom to do what you love. Best of all, you’ll finally get to buy that deluxe barbeque set that your wife has been resisting.
If you live below your means and you control your desire to upgrade, you probably won’t notice recessions. Even if you are laid off, you won’t have to change your way of life. If you’re used to eating out twice a week, driving a Lexus, and schmoozing at the golf club, then you can still do that because you’ve saved a year’s worth of expenses. Although this will chew into your savings, you won’t have to tighten your belt (or at least far less than those who were overextended).
On the other hand, those who constantly push the envelope of upgrades and live on credit will have to retrench their way of life significantly. The process of cutting back is depressing for anyone. That’s why living beyond your means is so risky – you’re bound to get disappointed.
Most of us don’t have a year’s worth of expenses saved. We feel pretty good if we have a month! Getting a year’s worth of expenses saved requires resisting every tempting upgrade until your life becomes highly inconvenient without it.
Always calculate nominal costs
Get into the habit of calculating the nominal costs of a reoccurring expense before committing to it. Figure out how much the subscription will cost you over a year, or even five to 20 years. When the next salesman tells you, “Hey, it’s only N500 a day!” remind yourself that it’s N182500 a year, and ask yourself if that extra N182,500 at the end of the year would be nice to have in the bank. Or you can suggest to the salesman that if it’s only a N500 a day, then why not just give it away?
1 post • Page 1 of 1
Who is online
Users browsing this forum: No registered users and 2 guests