Developing A Savings Culture
Saving money is a very importance practice on the journey to financial independence. It provides financial security and freedom and secures you during emergencies.
Let’s learn some basic savings tips we can adopt on our way to financial freedom.
Set a financial goal
Have a target or a goal and save towards it. It could be a short or long term goal. Do you want to save towards emergencies, payment of rent, purchase of a car, or to start a business? Having a target(s) helps to keep you focused and helps monitor your progress.
Create a Savings Plan
After identifying your goals, develop a savings plan to assist you achieve them. Various theories have been to propounded to guide people on developing a savings culture.
We have the 50 30 20 rule which says, out of your salary or income, 50% is spent on basic needs such as food, rent, transportation, utility etc,30% on investment and savings and the remaining 20% on wants such as vacations, purchase of luxurious items etc.
Others subscribe to the 70 20 10 rule. Here, 70% of your income goes into monthly bills and everyday expenses, 20% for savings and investment and 10% to charity, tithe or payment of debt if any.
There is the 80 20 rule too. 20% of your salary goes into savings and investment while 80% is for your general expenses.
These rules are just to serve as a guide. Feel free to develop a plan that works for you.
Create and Stick to a Budget
Budgeting helps create a spending plan for your money. Without a budget, you might end up spending without keeping track.
Set realistic and achievable targets and stick to them. Know your income and make plans to spend less than what you make. Budgeting also helps you to live within your means.
Separate your Savings from your Main Account
Create a separate account purposely for savings and set a standing order from your main account to that account. Having such an account prevents you from having direct access to the account.
Example of such accounts is the Bank of Africa Ambitious account. Visit any of our Branches and get signed up.
Buying Items in Bulk & Avoiding Impulse Purchase
Impulse buying is the spontaneous purchase of items without any pre-shopping intention. Giving in to impulse buying is a hindrance to you developing a savings culture. Learn to buy only things that you need.
Buying in bulk looks expensive yet cost effective. You can save cost for each unit of item purchased. Buying in bulk saves you time, cost of transportation etc. Cultivate the habit of purchasing items in bulk and save some cash.
Invest in Purchasing Quality Products
Purchasing high-quality items can save you money. You will only need to pay a considerable amount one time. Cheap items often get damaged after a few uses. Thus, you will be obliged to keep purchasing new products to replace them.
Note that expensive doesn’t always reflect quality and vice versa. Always look for quality.