Everyone wishes to be rich, but earning big bucks is not the one-stop solution to getting rich. The solution is simple: Save more and spend less. Taking unbudgeted, spontaneous trips, buying impulsively and filling your house with unnecessary household items and gadgets are some of the habits that stop you from achieving your savings target. Developing the right money-saving and investment measures should be your priority if you want to build wealth.
Here are five ways to stay focused on your savings goals.
SET MONEY GOALS
For you to be motivated to save, you need to set for yourself some goals you desire to achieve. Ask yourself; what are you saving for? Once the destination is clear, then start thinking of ways to save effectively and then pick your path. While long-term goals such as saving for retirement could mean investing in Mutual Funds, short-term goals such as buying a car could mean investing in Treasury Bills or Fixed Deposits. Don’t be overawed by the enormity of your goal, with long-term planning, you will slowly but assuredly move towards achieving your dream.
SAVE FIRST SPEND LATER
According to investment guru and the 4th wealthiest man on planet earth, Warren Buffet says; don’t save what’s left after spending, spend what’s left after saving. If you prioritize spending, you will save poorly for your future; instead, save before you plan your expenditure. The easiest way to do this is by choosing automated savings options and using our platform Festivesave for automatic payments towards a recurring deposit. You should also automate your payments so that they are paid in a timely fashion and without your intervention. This way, you’ll meet your mandatory savings goals and be left with a portion of your fund to use as you will.
MAKE A MONTHLY BUDGET
Another easy way to avoid overspending is by laying out a monthly budget; Identify your fixed, non-regular and discretionary expenses, next calculate what you can save and invest each month according to your financial goals. Try the 70-30 day rule of saving. Here, you use 70 percent of your monthly income on expenses such as rent, food, lifestyle etc and 30 percent for savings and investments. With an understanding of where your money ends up, you can make better spending choices and thus save more money.
THINK OF OPPORTUNITY COSTS
Every time you spend money on an item; consider how you would have alternatively saved up that money, commonly referred to as opportunity cost. It is an alternative course of action that could have optimized the use of resources. This doesn’t mean that you should deprive yourself of luxuries altogether but rather weigh your benefits against your costs every time you want to make a transaction.
WATCH YOUR DEBT
The easy availability of debt instruments often leads to unplanned spending. Avoid getting into debts to pay back previous debts. If you take a running loan from a bank, have a repayment plan in place and prioritise paying back your loan before anything else.
Setting money goals, being financially disciplined, and keeping an eye on your expenses are just some of the ways to boost savings and ultimately, create wealth for yourself.
Festivesave is Nigeria’s first digital savings platform specifically for festive celebrations (Christmas, Eid Kabir, Easter and Eid Fitr). The platform was created with the mission to take the stress out of festive celebrations by encouraging people to save enough funds to meet the additional expense of the festive season.