Nairalogue with Ifeoma Adeoye: Being Disciplined is the Key to Savings

When it comes to saving, there are no hard and fast rules. Some people say that you should save 10% of you income, others say 20% and others say 30%. For me, it is relative. I find that the more I earn or the more ambitious my next financial goal is, the larger the percentage of my income or the more aggressively I save. No matter your income, everybody can save. Saving N1,000 per month soon becomes a savings of N12,000, excluding interest. If you currently struggle to save, here are some tips to help you/motivate you.

Save Towards a Specific Goal
It is amazing how motivated a person could be once they have a clear vision of what the expected end result is. Saving towards a goal takes the “pain” out of the saving process and motivates you to save more than you typically would. Examples of saving goals include savings for a vacation, saving to buy a house or a car, saving for the fulfilment of having a certain amount of money in your account (N1m, N5m, 10m) etc. You can also set a goal to save enough money to start your investment journey – either by saving to invest in stocks, bonds or mutual funds or saving to kick start a business.

Make Your Savings Inaccessible
This is particularly important as it ensures that you remain disciplined and you meet your saving and financial goals. When you decide to save a portion of your income, you should try, come what may, to not take money out of the savings jar. There are alternatives to keeping the money in your account that may help you stay disciplined, e.g. putting the money in a fixed deposit or investing in mutual funds. If you want to leave the money in your savings account then you may consider having an ATM or debit card for ONLY your current account. Delink your debit card from your savings account, so that you do not have quick access to your savings. This will help curb impulsive spending on your savings account and it will also ensure that your money remains safe, in the event that your card is stolen.

Save first and Save Often
To properly/effectively save, you have to save before you spend, and not the other way round i.e. do not save what is left after you have taken care of your expenses, save a portion of your income and use what is left to sort out your expenses and any other thing you want to do. This is important as it ensures that you always save. It is also important to create a savings pattern e.g. save N10,000 every month or N20,000 every two months. This will ensure that you keep saving and ultimately meet your savings goals. Figure out a pattern that works for you and stick to it.

Keep Saving
Even if you do not meet your savings goal this month, keep going. Make a little sacrifice in order to make up for the shortfall next month. Never stop saving. Saving is not just something that is done by people with limited income, no. It is a good habit to cultivate, regardless of if you earn N40,000 per month or you earn N1bn per month. It is always important to have some extra cash tucked away for rainy days and emergencies, this is one of the reasons why we must keep saving.

I am not saying that saving is easy. In fact, saving and being smart with your money can be a slow, sometimes painful and annoying process at the beginning but it gets better and more fun when you start seeing the results, much like the weight loss journey. When it comes to saving, DISCIPLINE is key. Remember that in Nigeria, the return on a savings account is between 3% – 4% per annum. You can start earning substantial passive income by investing your savings in instruments that are relatively riskless, like a savings account and yield higher returns of 5% – 13% per annum.
Remember, start now, start small – just do it!

Photo Credit: Dreamstime | Jason Stitt