Virtually anyone can tell you the importance of saving for the future or saving for emergencies. Unfortunately, this knowledge hardly translates to improved savings culture among individuals. Over the course of rendering financial planning advice to individuals, I have come to realize that most people wish to save but simply don’t know how to. Here are a few suggestions on how to save easier and more successfully:
- Name your savings goal
What are you saving for? How much will it cost? When do you want to achieve it? How much do you need to put aside monthly to achieve it? Answering these questions will help you gain clarity and keep you faithful to your savings goal.
- Save in different pockets
Experience has shown that savings are better protected when done separately and according to purpose and tenor. For instance, if you want to buy a car in two years and you are saving for your child’s education in ten years, it is important to use different pockets to save for these goals. If you lump them up together, chances are high that when you have access to the funds, you’ll be tempted to spend more than you planned on the car. However, if you separate them, the funds for school fees continue to run safely while you achieve the car goal.
- Start with what you have, where you are.
Many people do not save because they believe they do not have enough to save. This mindset prevents them for putting aside for future goals and emergencies and makes them vulnerable to financial crisis. The truth is that saving money is always hard, even for those who earn a lot of money. This is because there will always be something to spend money on today. To help you strengthen your savings culture, start with a little amount and use a savings vehicle you cannot access. This will help you build the discipline you need. You can then increase the amount steadily as you go. This practice will also help you build your capacity to earn money from multiple streams.
- Use products that protect your savings from your impulses.
One challenge many individuals face is that they save with their left hand and withdraw with their right hand, thus their savings is inefficient. The whole essence of savings is to keep the money for the purpose it was meant for. There’s no point saving money and then going to withdraw it to spend on what it was not meant for. To enable you save better, you need to use savings products that protect you from your own impulses. There are several of these products and they can be used in different ways. Examples include mutual funds, term deposits certain insurance products, and some tech apps. Choose the best product according to your goal and according to your financial planner’s advice.
- Normalize saving windfalls
Many people see windfalls as money to be spent recklessly and on whims of all kinds. This is poor financial practice. Learn to save your windfalls. Even if you want to give yourself a treat, learn to keep aside at least some of the windfall. Remember, you were not even expecting that money anyway. So, just assume that the money did not come. Your finances will thank you for it and you will be happier with that decision in future. This does not mean that you cannot spend from windfalls; just learn to keep most of your windfalls for future purposes.
- Have savings targets for your additional streams of income
Savings discipline is not meant for just your salary or main source of income. It applies to all your sources of income. A lot of people think that the money they make from their side hustles and side gigs are meant to be “enjoyed” without restraint. This is not correct. Every money you earn should have a goal attached to it. Learn to give savings targets not just to salary but even to your income from side hustles, gifts and all other streams of income you may have.
- Learn to love saving
For many people, savings is a chore and they treat it like one, thus they approach their savings culture with trepidation, dislike, unhappiness, anger and even pain. This makes the whole savings process unenjoyable. Learn to see your savings as you paying yourself. See savings as something enjoyable and see it as delayed gratification which you will enjoy later. Learn to enjoy the process because only when you do that, will saving money become second nature to you. You will then be able to do it enjoyably and easily.
Remember, your savings can save you. Love your savings. Love saving!