How to Make Financial Savings a Habit
Saving money is one of those things in life that are easier said than done. In reality, it is a lot easier and more enjoyable to spend money without keeping the future in view than to put money away for future use. Currently, the average Nigerian lives below the $2 line per day, leaving little disposable income and almost nothing to be saved. Given the harsh economic reality in the country, making the extra effort to save can be daunting, especially with mounting pressures on the income, which has been further devalued by an increasing rate of inflation.
If you can barely pay your bills with your current income, the idea of saving will seem absurd. However, saving is an essential means to financial security. Moreover, because we cannot predict what the future has in stock, saving money provides that safety net in the face of eventualities. As you increase your savings, worries about your financial responsibilities will reduce, as long as you are not living above your means.
Unfortunately, there is no magic formula on how to save your money. Rather, what is needed is self-discipline and an understanding of how to make the culture of saving money so easy that it becomes a habit.
- Start by having a personal budget. Having a personal monthly budget is a sure way to help you plan for expenses, curb unnecessary spending and prioritize savings. Separate your income from your expenses. That way, you will ascertain how much money can be channelled towards your savings. If your expenses are more than your income, you will need to adjust your lifestyle by prioritising your expenditure.
- Have a savings goal. Working towards a financial goal is another practical way to motivate you to save, while focusing on your needs and disciplining yourself from overspending. Making your goals clear is the first step towards achieving them. A clear goal will serve as a visual reminder of how much you need to save and what it is you’re saving for. For example, you can set a target to save towards buying yourself and your family a plot of land in the next 48 months. You may do the calculations on how much is required for the land at the area of your choice and agree on what proportion of your income you plan to set aside for this laudable goal.
- Set realistic targets. Scrutinise the goals that you have set for yourself and make sure they are realistic. Make sure your goal is simple and easy to reach. If you are saving towards a particular goal, it is important for you to first consider your income. It is unrealistic for you to plan to save N30, 000 a month if you earn N50, 000 monthly. It is essential to ensure that the amount you chose to save from your income does not put pressure on your disposable income.
- Pay yourself first. Another secret to improving your saving habit is to pay yourself first. Ideally, 10%-15% of your income should be set aside untouched as savings. That is, if you earn N50, 000 monthly, you should put away a minimum of N5, 000 into your savings. Assume you owe yourself. That way, when you earn an income, you put it in a savings before spending on anything else. Rather than trying to save what is left after spending, put the money away into a designated account first before other expenses come up.
- Avoid lifestyle inflation. There is a tendency to spend more money when we earn more and this should not be so. We attach ourselves to more financial responsibilities by increasing our taste and accumulating more material resources, which, most times, end up being liabilities. This is known as lifestyle inflation. Lifestyle inflation prevents you from saving and investing towards the future.
- Separate your savings. Operating a separate account strictly for your savings helps to control your spending and track your progress. If you leave the money that you are saving in your current account, there is a high possibility that your expenditure might affect the money you have allocated to savings. Instead, open a specific account for the cash that is meant for your savings. If you find a savings method that earns interest, that’s even better.
There is real confidence and rest of mind that comes from knowing that you have funds to fall back on if you face the need for unexpected expenses in the nearest future. Think of how easy it would be to manage an unexpected crisis when you have an emergency fund set aside for such circumstances. With Leadway Assurance, you have the option of saving money through our different savings plans:
- Personal Savings Plan: This plan allows you save towards the future at your convenience. With no minimum contributions or rules about how frequent you make contributions, you can save how and when you want to. The Personal Savings Plan also has a complimentary life cover of ₦1,000,000.00 or half the premium account balance for policyholders aged 60 years and below. The plan also provides a cover of ₦200,000.00 if the policyholder falls victim to certain illnesses or becomes permanently disabled because of an accident.
- Leadway Savings Plan: This product is designed to assist you in saving for a brighter future, with the confidence that you have cover if the unexpected should happen. This policy allows you make savings contribution, which accumulates interest at Leadway Assurance’s rate during the term of the policy. Also, there is a compulsory Life Insurance of ₦1,000,000.00 included in the policy. Regular contributions into the Policy can be as little as ₦7,500.00 a month, with interest earnings at Leadway’s standard rate. All interest earnings are tax-free.
With these saving plans, you will agree that you are surely covered for the rainy day. For inquiries on our savings policies, call our customer care service on (01) 2800 700, 2800 701 and +2348129997175, or send an email to Lcs@leadway.com for more details.