Second week of January already coming to an end, some new year resolutions has been broken. Few resolutions will make it through the year; others may scale through or barely make it past the first month. What’s more important is we get to see the New Year – another chance for us to make things right. As we all want to make the most out of the New Year, what’s a better way than having a profitable money saving habit?
Being independent and trying to do something reasonable for your life can be hard. You get to worry about everything, from the next meal to data bundles, utility bills, feeding, clothing, vacations, family support, and transportation – you have a car, you worry about fuel, repairs; the list is unending and you find yourself spending non-stop.
Despite having a budget and understanding what I am going to be spending on these periods, I still find myself going broke, why because I have made no savings for emergencies – expenses that arise unexpectedly.
Ever since I became financially independent, I do a lot of reading and asking questions on how to inculcate a good money saving habit and I have sought out to these eight money saving habits.
1. Create a budget:
Are you looking for an easy way to begin? The first step to saving more efficiently is to keep track of what to spend and budget. On the first day of the new month, list out everything you would be spending on (utility, transportation/car maintenance, clothing etc.) get receipts or take down notes in your notepads. People tend to be most excited about their new goals and spending plans early in the year, but you can keep the motivation going by writing out goals and even creating a visual representation of them.
2. Know what to save and spend as per your income:
The idea of knowing what to save and spend is to live within your means. Your monthly income hits your account and you have no idea how to allocate your funds, you need to know that you can save from what you earn even if it is as low as N50, 000. How do you do that: for every amount of money you earn, apply a 70-20-10 rule which involves saving for long-term and short-term goals. This is where 70% of your income goes to your living expenses, 10% for your short-term goals, and 20% for your long-term goals. In order news, 30 % of your income goes to your savings while 70% takes care of your monthly expenses.
3. Save automatically:
Signing up for an automatic debit from your account can save you the stress of questioning if you are to save or not I recently signed up on Piggybank and I set an amount that will be deducted from my account. This is to help me achieve my saving goal.
4. Have an emergency savings:
While the size of your emergency funds will vary depending on your lifestyle, monthly income, the rule of thumb is to put away at least three to six months’ worth of expenses. Not having an emergency savings is one of the reasons many people tend to borrow money or be broke. Emergencies are bound to happen and are unpredictable, they cant always be avoided but having an emergency savings can take the financial sting out.
5. Get crafty:
I enjoy the benefits of making DIY projects. It saves me from making expenses I could fix by sparing my time. You can save money by fixing old appliances or mending clothes instead of buying new ones, making your own gifts and homemade items.
6. Track your finances:
Have you ever said, “I don’t know where my money goes,” or “Money just comes and goes from my hand?” Well you should know where it is spent or where it is invested. This year take some time out to track your money and keep a record of it. When you know where your money is, you will be much more in control with your life.
7. Save for an investment:
While money does not grow on trees, it can grow when you save and invest wisely. Savings from your long-term goals – 20% of your income can take care of your investments. Instead of leaving your savings in your account, you can invest in treasury bills. Invest in properties like land, gold, stocks among others. I recently signed up ThriveAgric, an agricultural investment platform where I get to fund a farm and at the end of farming year I get my returns in few months.
8. Pay off your debt:
You are losing more money if you do not pay your debt. It is hard to direct money into savings when you are are still weighed down by debt. Paying off debt needs to be a top priority this year or better still avoid debt. If you cannot afford it, do not buy it. That is the rule I live by. I am not one to borrow to get things done. I will rather save until I can afford it.
The New Year often inspires us to aim for a fresh set of goals, including a good money saving habit. I hope the New Year you are able to live according to your means, spend less, save more and invest.
Which of these habits are you currently practising? What’s your saving habits like? What would you love to add?
Leave a comment below and share, someone may need this to start their new year on the right track.