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Importance of Saving Money

“Don’t save what is left after spending; spend what is left after saving” is the advice given by the world’s most successful investor Warren Buffet. The importance of saving money cannot be overemphasised.

Saving is an excellent habit that you must inculcate early on in life to ensure your financial security.

Life is always throwing new challenges. While you cannot predict these, you can always prepare for them. Learning how to save money for any future contingencies is one of the best things you can do to ensure that you are able to tackle life’s many hurdles. Your savings can give you a sense of power and protection that can help you navigate through obstacles and emergencies and enjoy your life to the fullest.

Major reasons to save money include:

·        To have an emergency fund to cover unexpected expenses such as a medical emergency or an unexpected expensive repair for your home or vehicle

·        To have a retirement fund to take care of your day-to-day expenses after you retire

·        To make investments that can earn an income that beats inflation

·        To make a down payment for your home or other big purchases

·        To pay for your children’s education and marriage

Besides the above, you can also find your reasons to save, but save you must!

How to save money

If you are wondering how to save money, here are some habits that you can adopt:

·        Do not keep too much debt - Debt diminishes your savings. While you may get lump sum funds through a loan or a credit card, the high interest rates will erode your savings in the long run. Therefore, limiting your debt is crucial to save money

·        Buy genuine products - A counterfeit or low-quality product may be inexpensive but would not last you as long as the original product. You may save money in the short term but would end up spending more on repair, maintenance, or repurchase in the long term. So, choose genuine products that offer a warranty

·        Avoid spending money on outside food or entertainment purposes - Being mindful of your spending when you step out to eat or socialise is important. Many people end up losing track of their money when they go out. However, being conscious of your expenses can help you curb your spending

·        Ask for discounts, coupon codes, and cash backs - Asking for discounts, coupon codes, or cash backs can be a great way to reduce your expenses. Many brands offer rewards and discounts from time to time. You can plan your purchases when the seller is offering a festive discount and cut your spending considerably

·        Make saving a habit - Try to make saving a part of your life. Once it becomes a habit, you will no longer need to go out of your way to save money. You will automatically think about your financial future and the well-being of your family

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Saving is crucial. This is much easier said than done. It is not uncommon for your short term happiness to override your long term goal of saving. To be able to save, you need to be firm with yourself.

Here are some steps to start saving:

1.     Estimate your current sources of income and the total amount of income.

2.     Set aside funds required to run your household and meet other necessary expenses.

3.     Earmark funds for expenses to be incurred on shopping, outings, and other activities.

4.     Mark the rest of your earnings as your monthly savings.

5.     Set a tight budget for yourself and operate within the budget at all times, barring a few unavoidable exceptions such as a medical emergency.

Once you have an exhaustive plan of your expenditure, you would be able to find out the amount of money left over for savings. This will give you an estimate on how much you can save every month.Then plan on deploying these savings in appropriate investment avenues.