How to Save Money: 5 Proven Ways to Begin the Journey
Money management is vital. Saving is one of the challenges which affects almost all families and individuals. Learn ways to improve saving.
Save Money
Introduction
Saving money is big challenge for most of us. Personally I struggle to save money and most of the times I do not keep the promise I told myself. Saving is putting money aside for future use. There are many ways of saving money. Opening an account with the bank can help save money. A savings Sacco is also another choice because some Sacco’s give dividends at the end of each year. Saving is a personal decision, hence the frequency of saving lie on the saver. For example, for salaried people one can save every end month because they are paid every end month. Business people should decide the frequency of saving, daily, weekly or monthly. The importance of saving is the ability to be cushioned in bad times. Celebrations do not last for long, so during abundance, it is important to keep some money aside to help you during problems. Employment does not last forever, retirement is coming. Businesses do not thrive all the time, bad times come and it is good to be prepared. For example, think about the impact that COVID-19 brought to economies. Who would have thought that a virus can cripple almost all sectors of an economy? Therefore, saving is the solution for the future. Saving can be done through keeping liquid cash, buying treasury bonds, and purchasing shares from listed companies. The following are ways which can be used to become good at saving:
First, save small but regularly. Most people do not save because they say they earn little money. Saving is a state of the mind not how much money one gets. Beginning small is a safe way to start. Irrespective of how much you earn, create a habit of saving. Saving $1 per day means you have saved $30 per month, and in a year you have saved a total f $360. The best way to start saving is to open a fixed bank or saving account. In case you open a joint account, neither should be able to withdraw the cash. Accept the clause that says a withdrawal can only be done with signature all parties to the account. Once you begin with small amount which you are confident you will save regularly, it will be possible to increase the amount to save slowly. Consistency is the key. So be consistent.
In addition, differentiate between needs and wants. A need is a basic commodity which we require to make living possible, examples include a house, food and water and clothes. A want is a commodity which improves our life but we can do without it, for example buying a pizza every week, car etcetera. The first step is to take a paper and a pen and identify all your need and wants. Once you have identified your need and wants, make a list of how much you spend on each. Concentrate on the wants list. Analyze and see if there is want you can reduce, adjust or eliminate completely. Once you are done with that step, use the equivalent of the money you spend to save. Bravo! You are on another level of saving.
Besides, access your credibility. Do you borrow to spend on wants? To be good in saving, it is important to minimize borrowing especially borrowing to spend on wants instead of investing. If borrowing is for investment, consider how much return you will get. Ask yourself, is it worth borrowing or is it safer to save and invest afterword? When money is borrowed, it must be repaid periodically inclusive of interest. Therefore, it is vital to question if you will be able to repay the interest as required. Any default in borrowing qualifies for penalties which are additional costs to the borrower. If currently you have a loan, pay it, and begin strategizing for ways of living without a loan. Saving will be possible since obligations will be less. The final rule is that never borrow to pay for your needs (borrowing to pay rent, buy clothes pay utilities etcetera). Live within your means and saving will not be a challenge.
Moreover, money can also be saved in investment instruments such as treasury bills, and buying shares in a listed company. Treasury bills are bonds sold by the government whenever they want to reduce the supply of money in the economy. The bills are sold to the citizens who get a return in form of dividend periodically (This depends on the conditions signed, it can be quarterly, half yearly, yearly, three ears, five years, ten years etcetera). On the other hand, different companies have their shares listed in an exchange market. Identify companies which are financially stable and unquestionable management. Have a look at their financial statements to identify their profitability. If you are not an expert in analyzing financial statements, get help from a financial consultant. Do research about different companies, identify where you are interested in buying shares. Some companies have a high price per share while others have relatively low prices. Invest in shares you are able to consistently buy. Every year you will get dividends. In both forms of investment, it is possible to re-invest the dividends received for that period. Re-investing helps in helping your capital grow.
Finally, find another source of income to supplement what you already have. The side hustle will cushion you during tough times. Sometimes you may fall sick, or lose a loved one. During those times, more money may be spent than the usual days. Having an extra source of money will help you back to your feet faster. When identifying which side hustle to engage in, find something you like doing. For example, if you are good in baking, begin by baking for close relatives and friends. The circle will begin to grow larger as day’s progress. Make sure to have a unique recipe in order to stand out in the market.
From the above discussion, saving is vital for every person who wants to grow financially. Do not be found unawares by troubles which come to our lives without knocking. Begin small but frequently, reduce borrowing, invest in financial instruments, reduce how much you spend on wants and have a side hustle to supplement your regular income. All the giant businessmen and investors we know began small, motivating factor being saving. Therefore, begin saving today if you have not been saving. This list is not conclusive, in the future more ways will be identified and put on paper.
This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.
© 2022 Miriam Syombua Mutisya
