How Not To Save: 7 Tips For Saving Smart

Who knew something as easy as saving money could be so complicated?  Let me share this story with you and you will see what I mean. Diana* a young lady I know decided it was time to get financially savvy. She made plans for her future, which included a goal to save money each month. After reviewing her expenses, she decided to cut down on her monthly massages from four to one per month. At a cost of N7, 000 per session, she was expecting savings of N21, 000 per month. Pretty impressive for a start. 

 

However at the end of the month she had only N6, 000 saved. Trying to solve this dilemma would have been difficult for anyone, but not Diana. She had done an excellent job of keeping all her receipts and documenting everything she had spent, making the process easy and straightforward. 

Diana had actually saved up N15, 000 but while visiting a mall with her friend, she saw that the touch screen microwave she had been longing for was on sale from N25,000 to N15,000, so she did what we all do; exclaimed loudly at how lucky she was to find such a bargain and quickly paid for it. 

 

What happened to the N15, 000 is a phenomenon I will like to call “ Loose Change Reprioritization Syndrome”. You are doing ok till you suddenly find yourself with money and no goal. Then, you revisit and readjust your wish list so that the item you 'eyed' in the store suddenly moves from wish list to must-have.What lessons can we learn from this?

 

1.Saving money takes more than intent. It requires strict discipline to follow through.

2.Keep your savings targeted by setting goals. It could range from buying a new phone to owning a house. Whatever the need you have identified, set a savings goal and begin to work towards it.

3.When saving, designate an account where the money will go. Otherwise you might find your account looking bigger than normal and become tempted to spend.

4.Create a budget and stick to it. A microwave at the bargain price she saw it would have been a great deal had it been on her budget.

5.Saving money simply means not using money. Do not confuse a bargain with savings. Once you make a purchase, you are spending not saving.

6.Be realistic about how much you can save. Avoid setting saving goals that will keep you agitated rather than at peace. Diana could afford to cut out 3 massages; some other person might cut out just one or two. The key thing is to give up spending no matter the amount.

7.Emergencies will arise, be prepared. Try as we may things crop up. Cars will break down, people get sick, machines will fail etc. Saving through this will entail knowing what can wait and what cannot.

 

If you haven't started saving, start today and share your thoughts.

Image Credit: http://nairanotes.files.wordpress.com

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