Saving money at a time when the world is going through an economic crunch may be daunting, but how do you keep your finances on track? Read on to learn about 7 money-saving tips to help keep your finances on track.
Financial stability is something a lot of people dream of but it doesn’t happen overnight. To become financially stable, there are habits you can start to imbibe to help you protect and build your wealth.
A large portion of financial stability is rooted in effective money management and implementation.
Learning about financial stability can take days or even weeks, but the result you can reap from this knowledge is priceless.
What exactly is money management?
Money management is the term used to describe all aspects of financial responsibility. Managing your money means effectively spending, investing, saving, and budgeting your personal finances.
Understanding and mastering money management is key to financial stability. For failing to keep their finances on track, a lot of Nigerians are known to lose substantial amounts of money to irresponsible spending.
You don’t need to be a financial guru before you become financially stable. Basic knowledge of money management and investment is enough to get you by. Equipping yourself with practical finance knowledge can help you in more ways than you’d think.
Why is money management important?
Aside from the monetary benefits, money management also teaches different life lessons and helps instill good values and habits.
Some of the reasons why money management is critical for everyone who intends to keep their finances on track include;
- Developing self-discipline
- Building your goals
- Paying off debt
Money-saving tips to improve your finances
A 2020 study shows that 77% of people in the US felt anxiety about their finances. By taking the right steps, you can set yourself up for long-term financial success and manage your money more effectively.
Here are seven steps you can take today to build your confidence and help you save your money more effectively.
1. Eliminate your debt
Before you even begin to start saving, make sure you are not trying to pay off a debt. If that is the case, make sure to complete the payment before you start to save your money.
It makes no sense to be in debt and be trying to save. By adding up how much you spend servicing your debt each month, you’ll get a clear picture of how much goes into servicing the debt. Once you’re free from paying interest on your debt, that money can easily be put into savings.
2. Set savings goals
One of the best ways to save money is by visualizing what you are saving for. To be a successful saver, you need to set saving targets along with a timeline to make it easier to save.
First, you need to set a target. It could be that you need to pay your rent or buy a house or a car. Once you have the target and what it costs, it is easy to determine what you will need to save each month to achieve your goal.
nairaCompare’s savings calculator can guide you through this process.
3. Automate your finances
If possible automate your savings. This means removing the saving amount immediately after your monthly pay hits your account.
You can also ensure that your bills are getting paid on time by automating them too. You still need to regularly review your finances, but this is a great way to take control of your money
4. Quit your habits
You may not realise this but bad habits have a huge impact on your savings. Of course, it’s not easy to quit a habit, whether it is smoking or impulse shopping, but if you calculate how much goes into funding that lifestyle, you will realise how much you are able to save.
5. Build your emergency fund
Not having money to pay for emergencies such as a broken-down car, home repairs, or an unexpected job loss is one of the worst feelings in the world.
As one trying to save, having an emergency fund is one of the best money moves you can make. That way, in the event of an emergency, you do not have to touch your savings.
It is advisable to save 3-6 months of essential living expenses to cover unexpected events.
6. Invest your money
While you are saving, it is possible to ensure that the money is not just idling away somewhere.
A lot of savings apps in Nigeria are known to offer interest on your savings. You can take advantage of those.
You can also begin to look out for investment opportunities, but be careful that you don’t fall victim to a scam. Investing your money can increase your income and secure your financial future.
7. Track your expenses
Balancing your expenditure never gets old-fashioned. In fact, it is crucial that you track your expenses even though you may not write cheques anymore.
Keeping a spending journal or register will keep you on track financially and prevent money mishaps such as over-drafting your account.
Benefits of saving money
For those seeking to get their finances back on track, saving money may seem like the right step to take but it does come with a couple of challenges.
Chief among them is the discipline required to successfully save your money. But once you keep the benefits it would bring in mind, you will realise that the effort you put in was worth it.
Saving not only provides a financial buffer for life’s uncertainties and increases feelings of security and peace of mind, but it also helps you meet set goals.
There is also evidence from a recent study that saving money is linked to increased happiness. The study found that people who are ‘planners’ and do future-oriented things such as setting goals and taking steps like saving money to achieve those goals, feel happier, and better about their lives, than those who don’t make plans.
Bonus tips to boost your money-saving habits
Annualise Your Spending
Having an annual figure of how much you spend on particular items can help you decide what to stop spending money on.
For instance, if you spend N200 on a bottle of soft drinks every day, at the end of a 30-day month you would have spent N6,000 just having soft drinks. If you multiply that by 12, annually, you would be spending N72,000 on that item alone.
Having such figures in mind helps you decide to quit habits that are not helpful.
Pack your lunch
As much as possible, limit how you visit eateries. An obvious money-saving tip is finding everyday savings.
If the cost of buying lunch at work is more than bringing you lunch from home, then over the course of a year, you are advised to opt for packing your lunch. That way, the extra can go into your saving.
Take a ‘staycation’
Though the term may be trendy, the thought behind it is solid: instead of dropping several thousand on tickets, look in your own backyard for fun vacations close to home.