You probably have worked more than a decade without savings because your income trickles in and saunters out; a typical case of living hand-to-mouth. It is not due to meagre earnings.
Saving money sometimes seems tough, but it can be done if you have a plan. Smart money management is no more sophisticated than some of the age old things already well known to you.
Many people don’t have a formal savings plan; and without one, the chances of saving enough money are very slim. Having a budget will help you create money for savings. By setting spending goals, most people find they can save regularly.
Change attitude
However, there seems to be some psychological and emotional hurdles that prevent most people from achieving their financial dream. Adjusting mental and financial attitude may improve the propensity to save.
Self discipline is important to eliminate desires to have everything. You must learn to be satisfied with whatever you have since you can’t practically have everything you want.
Cut expenses ruthlessly on the things that don’t matter so you can save for the things that really matter. If you consider yourself to be an impulsive spender, remove yourself from controlling spending.
You can do this by automating your savings, bill payments and investments. You will save time and be less inclined to impulsively spend your savings on irrelevances.
Too often we fail to act because we are searching for the absolute, accurate way to invest or save. We end up doing nothing instead. But action takes away fear, and a trial convinces you that a decent or simply good outcome is always better than nothing.
There are no excuses or acceptable blame game for your financial situation. Not even the Nigerian or unemployment situation is enough reason; for your circumstances are your responsibility even though it may not be entirely your fault.
The following tips may help you cultivate the saving habit you need in order not to spend more money than you earn, a fact also illustrated by George Clason’s The Richest Man in Babylon.
In the beginning, the amount you save is less important than the fact you are saving regularly. Begin with an amount you are sure to sustain, and with time keep on improving on it until you achieve a sense of saving as necessity.
Distinguish between needs and wants
You will save money if you distinguish between needs and wants. Needs are items that are necessary to sustain you such as shelter, food, clothing, and transportation. Wants are things that enhance or possibly improve your family life.
Shoes are a need, but new shoes every month are a want.
Set realistic, achievable savings goals
Experts suggest you save 10 per cent of your income. It’s a good goal, but don’t give up just because you can’t save that much. Establishing a savings habit and saving consistently is better than putting aside a big sum just once.
Start with an amount you know you can save consistently.
Set up a separate savings account using automatic deposit
If you mingle your savings with your regular checking account, you’ll almost certainly dip into your savings and may never pay them back.
If possible, have your employer or your spouse’s employer deduct a set amount from your paycheck each pay period and deposit it into your savings account automatically.
Decrease dependency on debt
Decreasing debt is an effective way to free up more money for saving. When you decrease dependency on debt, you will probably begin purchasing less and your total debt will begin to shrink.
Commit savings goals to writing
Writing down your savings goals can have a powerful impact on changing your behaviour. It makes your goals more real and concrete.
Write down your short-, medium-, and long-term goals along with your projected timeframe to achieve them. Make sure the goals are doable and realistic and review them regularly.
Develop a budget that includes savings
Include monthly savings into your budget. If you do not budget for savings, you probably will not save. Establish savings for emergencies as well as for short- and long-term goals.