How to Increase Your Savings

The first step to improving your savings habit is
to honestly assess your financial health. After all,
you can’t solve a problem if you don’t know what
it is. Improving your savings habit will help you
reach your short- and long- term financial goals.
Before you can save, you need to develop a clear
picture of your expenses and your income.
This will help you work out if you are spending
more than you actually earn and help you to fix
the situation by reducing your expenses –
remember it really is easier to cut down expenses
than it is to make more money.
No matter what you’re saving for – whether it’s
for retirement, a new home or a new car, or just
to cultivate a habit of savings - it’s important to
start early. When it comes to saving, the best
time to start is now.
There are five (5) steps that will help you start
saving:
• First, come up with a personal budget or
monthly spending plan. This will help you plan
for expenses, reduce excess spending, save for
future goals, have money put aside for
emergencies and prioritize savings. Separate your
income and expenses but make sure that you
update your budget regularly as these figures may
change from time to time. Your income will
include things like your salary, bonuses,
retirement income (if you have retired), income
from rents and things like that. Your expenses
may be food and water, housing, clothes,
transportation, education, utilities (such as phone
bills, electricity, internet and such) and personal
(such as hair and personal care). Once you have
estimated how much you will earn and spend,
subtract your expenses from your income. If you
have money left over, you can then decide how to
spend, save or invest this left over money. If your
expenses are more than your income, however,
you must adjust your budget by reducing your
expenses.
• Second, set realistic savings goals. Know
what it is you are saving for and how much you
need to save to achieve that goal. Make sure that
the amount you are saving is meaningful but
doable.
• Three, pay attention to your lifestyle;
manage lifestyle inflation. Most of us will spend
more money if we have more money to spend. As
we move up in our careers, we tend to spend
more. This is known as lifestyle inflation. Lifestyle
inflation works against our ability to save and
invest. You must remember that every extra naira
spent now, is less money in the bank. People tend
to spend more because they want to be and
appear like other people – neighbours, friends,
even family. But you must remember that these
people may owe a lot of money for them to live
the kind of life that they live. You need to decide
whether you want to join these people in a life of
debt or save to secure our families’ futures and
our retirement.
• Fourthly, understand the difference
between needs and wants. “Needs” are things that
you must have in order to survive, such as food,
shelter, clothing, healthcare, transportation and
such. On the other hand, “wants” are things you
would like to have, but that you do not
necessarily need for survival. Sometimes it is
difficult, especially these days, to tell the
difference between the two but you must honestly
do this if you want to manage your spending and
save.
Lastly, explore savings accounts. The easiest way
to save is to put the money in a savings account.
Try as much as possible not to touch the money
you save. To make sure that you do not touch
this money you can put it in a high yield savings
or investment account that has higher interest
rates. Since your money must stay in the account
for a period of time, this will help you to resist
any temptation to touch it.
These tips are really simple and if you stick to
them, you should see an improvement in your
savings. This has been courtesy Stanbic IBTC
Bank as part of The Bankers Committee Financial
Literacy Public Enlightenment Programme brought
to you by The Bankers Committee, comprising all
the commercial Banks in Nigeria and the Central
Bank of Nigeria, CBN.
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