What is saving? Investopedia (Yep. You read
right, investopedia) defines saving as “the amount left over when the cost
of a person's consumer expenditure is subtracted from the amount
of disposable income that he or she earns in a given period of time” In
layman’s terms, it is money that you can
set aside from your earnings after you have taken care of your expenses.
Most of us never really realize how important
it is to save until the time comes when we are in a bind and the regrets kick
in. Did I need those extra pairs of shoes? (I am a girl, shoes will always be
my first reference)…Did I really have to buy my friends three rounds of drinks
or whatever else that can be bought in rounds last weekend? We live for the
moment and leave tomorrow to take care of itself. After all, the Bible says it
will. Right? Wrong! Because the same Bible also talks of God helping those who
help themselves (I know this is nowhere in the Bible but it is implied).
So how do we go about saving? I always find
that is helps to imagine the worst possible ‘rainy day’ and start from there.
This will be your motivator because we all know if the universe has anything to
do with it, there will be a rainy day. Secondly it goes without saying that you
need to have a plan. An idea of where you want to be in future. This target
will also act as a motivator.
To start off, you should save a minimum of
10% of your regular income. Key word, minimum. Start by doing this diligently.
To ensure this happens without fail, have a standing instruction with your bank
so that the money is deducted and sent to your saving account as soon as your
income hits your regular account. Alternatively, you can have an arrangement
with your employer where the 10% is deducted from your pay and sent directly to
your saving account or scheme. The reason for avoiding touching your money
before the10% is off is that once you can access your money, all reasoning kind
of flies out the window. Not if those shoes, jeans or whatever else you have
had your eye on is still on display.
Other
than the 10% another way to save; especially if you are on a salaried gig; is
to join a co-operative society. These are mostly company enabled hence it is
much easier for funds to be deducted from you pay and put in your co-operative
account. Another avenue is the famous ‘Chamas’. This is where a group of
like-minded people come together and contribute an agreed monthly amount.
Chamas are a great saving culture in Kenya; they vary from one to another in so
many different ways but they are all geared towards the same goal; saving; (This
is a topic for another day).
Do
not stop at the 10%. As I said, this is the minimum. Start looking at the areas
in your spending that you can cut back on and divert the money spent on these
to your saving. Everyone wants a fridge stocked with ice-cream, wine, bacon
etc…but this is not a necessity. Divert those funds to your savings. Is that 30th
pair of shoes really necessary? Divert those funds to your savings. Do that
pair of jeans really need to be added to your wardrobe? Divert those funds to
your savings and deposit it in your savings accounts…banks accept deposits from
as low as 50/-.
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