One of the first lessons about finance is the savings habit. Good financial health encourages knowing how to save. It could be towards buying a new phone, paying rent, or even getting that couch you can’t afford but somehow can’t stop thinking about. You could also build a habit of just putting aside a percentage of your monthly income “just in case”.
Saving money is one of the most important things you can do for your finances. It gives you a cushion to fall back on in an emergency and can help you reach your financial goals faster. If you’ve never had a need to save, or you think it’s unnecessary, I’m here to convince you otherwise. Here are a few reasons why saving money is so important:
Car trouble? Household repairs? Unforeseen expenses? One of the best reasons to save money is to have an emergency fund. If something unexpected comes up, you won’t have to borrow or take loans and rack up debt. Aim to have at least 3-6 months of expenses saved so you’re covered in case of a job loss, illness, or another financial emergency.
Save for your goals
Another great reason to save money is to reach your financial goals faster. Whether you’re saving for a down payment on a house, a new car, or your retirement, the sooner you start saving, the better. You’ll be more motivated to stick to your savings plan if you have a specific goal.
Build your wealth
Saving money is one of the best ways to build wealth over time. When you have money in savings, you can invest it and let it grow. This can help you reach your financial goals sooner and build a nest egg for the future.
Peace of mind
Saving money can also give you peace of mind. When money is saved, you’ll know you have a cushion to fall back on if something goes wrong. So now you can sleep better at night and feel more relaxed during the day.
So, we know saving is essential, but how can we act? These days, due to the economic situation, many Nigerians may not have the luxury of saving. In fact, according to World Bank’s data, Nigeria’s Gross Domestic Savings has dropped to an all-time low from 57.16% in 2000 to 21.66% in 2020. Also, with the inflation rate skyrocketing, it’s harder for people to get by with their regular income.
Although this may be discouraging, the daily demands of life still indicate that without a proper savings culture, you may be at risk of financial difficulties.
If saving is something that you struggle with or you’re looking for a way to better your financial situation, here are some tips on how you can save efficiently:
You can decide on a percentage you want to save each month and grow from there. So as you get comfortable, you can increase your savings capacity. This will help build up an emergency fund to avoid borrowing and debt.
Have a budget
Create a budget and stick to it. It will help track your spending so that you don’t go overboard and live above your means. It also ensures that you save as much money as possible.
Avoid impulse purchases
The human brain is wired to make impulsive decisions, but this tendency can lead to overspending and poor money management. So instead of making an impulse purchase at the mall or online, wait until you have time to think about it and ensure the item will last long enough for you to need it.
Set up automatic savings
Using a savings platform to set funds aside automatically or having a bank account dedicated to your savings can help you build a good savings culture. This ensures you’re not tempted by an unexpected withdrawal from an ATM or debit card transaction when you’re short on cash.
Track your spending
Keep a log of all expenses so that you can track how much money is being spent on certain items. Keep receipts for all purchases made so that you can determine whether or not an item was worth purchasing in the first place and if so what price was paid for it and how
Set a savings goal
Savings towards a goal can be a huge motivator and help you stay disciplined. You may want to save towards buying a car, travel, house rent or any other major purchase.
Start saving today!
If you don’t already have a savings plan, now is the perfect time to start. Begin by setting aside a few thousand naira each month, and watch your savings grow over time. Earnipay is building a savings platform that helps you save money directly from your earnings. This way, you can apportion a part of your paycheck to save and get up to 12% interest on your savings.
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