Top Three Saving Opportunities You May Have Overlooked

It is never too late to start saving up and our top three saving opportunities you may have overlooked are perfect to help you.

As the year 2023 enters its grind, everyone is advised to make saving money a part of their financial goals irrespective of their age or social status.

One mistake most people make is thinking that saving at least a small amount is not worth it. They always dream of saving big. Any amount is better than nothing.

With that in mind, it is good to explore the different saving opportunities open to all.

Some may appear too technical, seeming like they can only be handled by finance gurus, but they are really not.

Note that investing gives your money the opportunity to grow.

What are saving opportunities?

Whether you are thinking of buying land for its appreciation value or you are looking towards the money market account, the fact remains that several opportunities to save money in Nigeria abound.

These types of saving opportunities are known to yield a better interest/risk ratio.

They are usually long-term investments designed, studied, and analyzed for you to build a pension plan based on real assets, at your own pace while improving your standard of living by providing a new source of income at the same time.

Reasons why you should save your money

These days, saving money goes just beyond setting a percentage of your income aside.

There is a whole lot of thought that goes into it. Most people know they should be saving a portion of their income, but they might not grasp all of the benefits of doing so.

Saving is an important habit to get into for a number of reasons. It helps you cover future expenses, manage financial stress, plan for vacations, and more.

Other reasons why you should save money include;

• Having a safety net during hardships

Setting money aside every month can provide a buffer for you in the event of sudden and unexpected life events. These may include medical costs, unemployment, home repairs, and family emergencies.

• Meeting life goals

Life goals aren’t free and they usually don’t come cheap. From pursuing higher education to buying a home, meeting those goals requires a certain amount of funding, which you’ll need to plan ahead for.

The sooner you start saving for your goals, the more likely you’ll achieve them and achieve them faster.

• Work flexibility

Saving your money allows you to have a cushion of support during gaps in employment or a switch in jobs.

Not only does saving up money give you the support to take time off for mental and physical health, but it also gives you leverage in realizing broader career goals.

• More travel opportunities

Getting to travel is one of the great rewards of life, however, it can be quite expensive.

By setting aside a predetermined amount each month for a vacation fund, you can avoid having to deal with long-term debt to fund your travel.

• Extra income

Yes, as stated, saving goes beyond just setting money aside every month.

With the right savings account, your money can yield interest for you, giving you an extra layer of income.

You may want to keep your savings in a high-yield savings account, where they can grow over time.

Saving opportunities you may have overlooked

Again, there exist several opportunities for you to save money but you may just have overlooked them.

This happens mostly because of the seeming technicalities involved. However, if properly broken down, you will come to realise that the processes are usually very simple.

Some of the saving opportunities you may want to consider in2023 include;

1. High-yield savings account

A high-yield savings account is a type of savings account that typically pays up to 20 times the national average of a standard savings account.

High-yield savings accounts stand out from traditional savings accounts in that they reward you with a higher interest rate, allowing your money to grow even faster as it sits in your account.

The interest rate that these accounts offer is noted as Annual Percentage Yield, APY.

The chief difference between a high-yield savings account and a more traditional savings account is the higher interest rate offered by the high-yield account.

Typically, a high-yield interest account can earn around 3% APY. By comparison, the savings average is 0.33% APY.

Traditionally, people have held a savings account at the same bank where they hold their main account, making transfers between the two easy and quick.

But with the advent of online banks and with instant account opening, the competition for savings rates has skyrocketed, creating a new category of “high-yield savings accounts.”

2. Treasury Bills

If you’re seeking secure and safe forms of saving money in Nigeria and investing disposable income, Treasury Bills are an excellent choice.

Treasury Bills are backed up by the full faith of the Nigerian government. Asides from being used as a form of capital investment, T-bills can also be used as collateral for loans.

T-bills are an excellent investment for disposable income and a good financial plan for people who are planning to retire.

In addition, they are liquid and can easily be converted to cash.

Because they are guaranteed by the full faith of the Federal Government, there is no defaulting with Treasury Bills. In the event that the government cannot pay, the CBN can take steps to settle all investors.

It also pays higher interest than an investor will get from a Commercial Bank.

Treasury Bills also provide investment opportunities not just for the big players in the investing world, but also for small and new payers in the debt instrument market

The price of T-bills and the return for investors may be affected by various factors such as macroeconomic conditions, investor risk tolerance, inflation, monetary policy, and specific supply and demand conditions for T-bills.

Treasury Bills are issued in fixed tenors of 91, 182, and 364 days.

They are sold through a bi-weekly auction conducted by the CBN or through the bank at the secondary market.

You can purchase a treasury bill at any of the scheduled times when they are auctioned by the Federal Government.

3. Savings Bonds

Also issued by the Federal Government of Nigeria, Bonds are regarded as one of the safest types of savings and investment as it is backed by the full faith and credit of the Federal Government of Nigeria.

Their lack of a default risk makes it assured that your interest and principal would be paid when due. Also, state and local taxes do not apply to the investment.

You can invest in FGN bonds through stock brokers on The Nigerian Stock Exchange (NSE).

The minimum amount a customer can invest in Bonds is ₦ 50,001,000.00 for the primary auction and an ₦ 100million for the secondary market.

However, banks can sell from their position on a daily basis to customers.

The best saving strategies for 2023

To maximise your saving this year, there are strategies you can deploy.

A few of them are listed below.

• Automate your savings

Automating your savings is a smart way to increase them. Putting your savings on autopilot is an easy way to separate savings from spending money.

• Set up an emergency fund

One common piece of advice for emergency funds is to save at least three to six months’ worth of living expenses before you start saving for other goals.

• Pay off your debt

It’s crucial to tackle your debt as quickly as possible because the interest added each month to the balance is money you instead could be saving.

A popular savings strategy for paying off debt is to zero out the highest-interest debt first.

• Save for short-term goals

Once you have established an emergency fund, separate your next priorities into three savings buckets, which include short-, medium- and long-term goals.

• Explore high-yield savings account

A high-yield savings account returns a better yield than many standard savings accounts and can help boost your savings.

The interest earned could serve as an extra source of income to meet your other expenses. Or, you could reinvest it and start another short-term target.

• Use multiple savings accounts

Where possible, having more than one savings account is another way to earmark your money for different financial goals.

Having multiple savings accounts can help ensure that money meant for one savings goal isn’t being used for another.

If all of your savings are in one account, for example, money meant for your emergency fund might accidentally be used for a vacation.