31-year-old Laitan Johnson has dreams and aspirations but says, “I Don’t Earn Enough to Save.” He wants to achieve his goals, such as renting an apartment, buying a car, and getting married next year; it seems almost impossible with his income of N125,000 a month. When money is so tight, saving tends to be the last thing on your mind. However, when it comes to money matters, it is essential to consider today and the future.
Here are some steps to take in order to ensure that you save money
Deal with your Debt
Before you start saving in earnest, you should tackle your debt, particularly the high-interest debt. It doesn’t make sense to pay more in loans than you earn in interest. Your wealth cannot grow if you ignore your debt.
Track your expenses
To create a workable budget, you must know where your money is going and track your expenses. Write down everything that you purchase for, say, a month. You will likely find some expenses you could have done without at the end of the period.
Establish a budget
One of the best ways to keep your finances in check is to budget. List all your routine monthly expenditures and other expenses, and subtract those amounts from your income.
Prioritizing your spending is essential. The key is to differentiate between needs and wants and be brutally honest with yourself about what you need. You will soon find that there is some excess that you can put towards saving. It does require sacrifice and cutting back on things you love, but only for a season. By making small, manageable changes in your everyday expenses, you can make a huge impact on your overall financial situation.
Pay yourself first
As soon as your salary comes in, try to save at least 10%; put your savings on autopilot. Talk to your bank about setting up a direct debit from your current account to a savings account, a money market account, or a mutual fund each month. This will be the foundation of your savings. It will need sacrifice and will not be easy, but once you get started, you will see the savings growing, encouraging you to continue saving.
Mind the company that you keep
Your choice of friends can have a significant impact on your finances. If your friends are causing you to overspend or mock your frugality and efforts to cut back, you may need to reconsider some relationships. Try to select those who build you up and encourage you to achieve your goals. If you constantly try to keep up appearances, you will have very little chance of financial stability and will continue to live from salary to salary without growth.
From his earnings of N125,000 a month, Charles is considering his options. With his obligations to his parents and siblings, transport, and other costs, he can only afford to set aside N10,000 a month to build savings. The FGN Savings Bond is one of the options available for small savers with a minimum entry point of just N5,000 with increases after that in multiples of N1,000 and up to a maximum subscription of N50 million.
Federal Government of Nigeria (FGN) Savings Bond
The Federal Government of Nigeria (FGN) Savings Bond issued by the Debt Management Office is part of the Government’s program to encourage small savers who can earn more than the interest earned on their savings accounts with banks. It is the debt security of the FGN backed by the ‘full faith and credit’ of the federal government and has no default risk. This means it is a safe investment where interest will be paid regularly and the principal repaid at maturity. Another attractive feature is that the income earned is exempted from taxes and can be traded in the secondary market on the Nigerian Stock Exchange.
The FGN Savings Bond makes it possible for smaller investors to contribute to the development of the economy while also earning good returns on a safe investment in a sovereign instrument.
The art of saving is a state of mind. Like any skill, it takes effort, commitment, and discipline. If you develop poor spending habits when you are young, it will be no different when you earn significant sums of money. It won’t be any different if you cannot save from the N125,000 you currently earn, even if you earn N1,000,000 monthly.
Time is a fundamental factor in successful investing. The key is just to get started now, little by little. Investing even small amounts of money early can grow into a significant sum over time; the sooner you start saving, the better. No excuses!
About The Author
Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.
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Her Website is www.moneymatterswithnimi.com, or you can send her an email:[email protected]
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