Saving is probably one of the most beneficial yet toughest habits to adopt for many people. It is common for you to find excuses such as too many expenses against very little income, so as to validate your inability to save.
This year, find a motivation that will push you to save. Do you want to enjoy a holiday in some island or even outside the country? Or you have had a project in mind for the last few years – build a house, buy some land – or even purchase that high end smartphone? You may have noticed 365 days are not so many, and you can actually do it.
If you are one of those struggling to keep aside some money, we have a few tips here. Why is it so difficult to save?
Reasons for difficulties in saving money
- Lack of motivating goal – perhaps one of the most ignored aspects in saving conversations. Set a goal and save towards accomplishing it. Saving is not all about emergencies.
- Not making a budget – yes, without a budget you cannot identify what takes all your money. You cannot plan your spending.
- Impulse buying and spending – because you are unable to make a budget, you spend money anyhow. Your excuse is that you spend according to need. A dumb excuse.
- Living beyond your means – yes, we are not going to put earning low here – but living large to impress yet your salary doesn’t allow. You earn a net of KES 30,000 and live in an apartment of KES 15,000. You spend half your salary on rent?!
- Inability to get extra income – yes, because your salary is so low and you are unable to do something else that will increase your monthly income makes it difficult for you to save, not just for holiday but for any rainy day.
- Indiscipline and inconsistency – you started saving, but stopped. Or you just save sometimes when you think you have some extras coins. Come on, saving is not about those extra coins but a consistent amount of money set side at a particular period.
So how can you get out of this rut? Here are some ways to make you an efficient saver.
Five easy saving tips for beginners
- Make a budget
This is one of the most important habits to inculcate in your life. If you have a net income of KES 30,000, write down your basic expenses and necessary expenses, and their cost. The simple 50/30/20 rule popularized by US Senator Elizabeth Warren has been helpful to many people. It simply means that 50 percent of your salary should go to basic needs, 30 percent on wants, and 20 percent into savings.
So, if you earn KES 30,000 it doesn’t make sense to live in a KES 15,000 house, unless you have extra income. All your food, your rent, water bills, electricity bills, insurance premiums, should be factored in the KES 15,000 for the whole month.
Use KES 9,000 to meet your wants. If you love to go out for lunch or dinner, want that pair of jeans or jacket, need to pay for DSTV, make sure they all fit in the 30 percent. Limit this expense as much as possible.
You now have KES 6,000 to put in your savings account for the month. Budgeting discipline is key to achieving this. After 12 months, you will have KES 72,000.
- Open an emergency account
It is normal for emergencies to happen and you have to spend your money on them. How can you make sure emergencies don’t take a toll on you? Pray you and family will be well. Secondly, friends and relatives are not your emergency. You can’t solve everyone’s money problem. Open an emergency account where you can put KES 1,000 every month. You can decide to get the 1k from the savings portion, or any of the other three portions. Just make sure your savings don’t go below KES 5,000.
- Do not live beyond your means
Those Friday beer parties, the frequent road trips, the impulsive purchases of video game consoles, eating out instead of cooking at home, all these eat into your income badly. That’s why you are paid on 25th and by 13th of the next month, you are borrowing from friends and colleagues to wobble through the month.
- Avoid unnecessary debts
Debts are part of life, but it is possible to live a debt free life, or have manageable debts. Taking that loan to buy a piece of land you are unable to develop is not a wise idea, unless it is long term. Borrowing from loan apps that are exploitative in order to solve a friend’s or relative’s problem is not wise, too. Using a loan to start a business is quite risky, unless you are able to service that loan even if your job ended today. Only create debts that can service themselves.
- Create an extra income
A side hustle as it is known is a good idea. If it is a business, get into a business you understand well, not one that will milk you more and more money. If it is an extra job, the better. Most employed Kenyans look down on hustles such as waiting tables at a restaurant, taxi-driving, selling grocery, etc. But the pandemic taught us a huge lesson – you can have your job and still do all these. Never say, ‘I’m doing uber while waiting for a good job’. Do it because you want to make extra coins that will shield you from financial turmoil.
- Be consistent with your saving
Don’t save using ‘extra coins’. Save a specific amount of money every day, week, or month depending on your income regularity. Save any extra money you may have. Probably get a piggy bank for the coins to boost your savings, but that should not be your main savings plan. Consistency will make you discover you have a lot of money that you have just been wasting.
Saving plan template
Imagine your income is irregular, or you are just not disciplined in dropping money in the account when you should. Remember consistency is key for you to save some money for that vacation, or for that project you have been wanting to do. We have some saving plan templates to help you:
- The 52 week saving chart template
Use the 52 week saving challenge template to gain discipline in incremental savings.
- Daily saving template
The daily saving template is even simpler. Decide on a regular amount of money save every day. For instance, if you earn KES 30,000, put KES 100 in your savings account daily. That is KES 3,000 every month, and KES 36,000 at the end of the year! Don’t touch this money until the end of the year.
- Use the 50/30/20 rule
You can easily use this rule no matter the circumstances. Once the salary comes in, take out the 20 percent and put it in your savings account before you do any other thing. With the remaining amount, you can now do your budgets.
- Have a piggy bank for extra coins
Aren’t you jealous of those people who open their piggy banks every end of the year and out flows some cash? Coins are money, they are not rejects for sweets and snacks. Throw those coins in a piggy bank. At the end of twelve months, you will be surprised.
We hope with these simple ways of saving money, you will have your first vacation this year without hurting yourself financially. Or buy that iPhone, travel camera, laptop or piece of land you have wanted for long!