Why should you save? This is the question that decides for people if saving should be a priority or not. Everyone’s reasons can be, and will be different, such as:
- Saving to start a business
- Saving for your kids’ tuition
- Saving for a vacation
- Saving for a car
- Saving for retirement
- Saving for a new phone/laptop
To master the art of saving money, you need to have saving goals. These goals are goals that matter to you, that are important to you.
Now that we know that goals are important to be effective at saving, how do you start? There are 3 major ways to start saving, and by making a commitment to start today, to be disciplined about doing it, and practising delayed gratification and opportunity cost diligently, you will be an expert at this.
- Prioritize it
Having a saving goal helps you make saving a priority. Let’s say your goal is to save enough money to pay for a masters degree; now, you have a goal. This makes it imperative that you save money for it. Next, you,
- Set a specific deadline for attaining this goal. When do you want to start your masters? Write it down or type it in your journal.
- Divide the total amount of what you need by the number of weeks or months that it will take to save up the fees, i.e. your deadline. If the amount you are able to save won’t be enough by the deadline, extend the deadline, or see if you can increase your savings by getting other sources of income.
- Determine to save religiously.
2. Save more spend less
There is always money to save, you just have to find it, or make it fall out. How? Take note of all your weekly expenditures. What are you buying that you could do without?
Before you go shopping, make a list of what you need, and save whatever money remains after making that list. Cutting down on your water and electricity bills gives you money to save. Cook at home rather than eat out. This way, you don’t have to spend money on lunch: just save it
3. Save First, Everything Else later
Some call this ‘paying yourself first. It is vital that, once you get a paycheck, you take out the savings first. You can schedule payments on your mobile banking app, so that every month at a certain date, your savings are automatically deducted before you use the money to pay anyone else.
These 3 ways are key to mastering the art of saving, and sticking to these steps will be financially rewarding in the end.