Amidst rising costs of living and bills to take care of, we all want to save and put aside funds for a rainy day. Saving money can be for a specific goal for example buying a house, a wedding, travel, retirement or for a rainy day. Whichever your goal is, it is important to have a plan to guide you with your savings plan. These are the top tips we have for saving money.
1. Make a budget
Making a budget is crucial in helping you prioritize your expenditure and helps you find a balance between your spending and saving. Budgeting involves analyzing your expenses and deducting them from your income and setting aside a portion of the remainder for savings. There are a tone of apps on the app store that aid in budgeting or you can do it the good old fashion way and write your monthly expenses on paper. Categorize your expenses into absolute basics (those you can’t do without) and extras. This will give you a clear picture on what to put first.
2. Record your spending
Spending on the little things is often what ends up costing you more compared to the big things. Little expenses that seem mundane cumulate to enormous costs. For example you may think that a 200 shilling latte is inexpensive but the cost over a period of thirty days comes to 6,000 Ksh. So track your expenses, every single one, over the period of one month and this will give you amazing clarity on where your money goes. This will open your eyes on what you can do to improve your saving game.
3. Find ways you can cut your spending
After recording and analyzing your spending, identify non essentials that you can cut back on. Look for ways you can cut back on expenses for example, cancel subscriptions and memberships you no longer use especially those whose renewal is automated, plan your meals and limit the number of times you eat out, give yourself time before purchasing an item on impulse and more.
4. Open a savings account
Aside from your basic transaction account, it is important that you open a savings account. This is because a savings account will give you a higher interest rate. You can kick it up a notch and automate scheduled transfers from your main transaction account. This will help you ward off the desire to spend on impulse.
5. Set savings goals
Why are you saving money? Determine you reason(s) for saving and figure out how much money you need to save for each goal and how long it will take. Saving goals can be short term or long term. Examples of short term goals include saving for a car, travel, a wedding and more. Long term goals include retirement, your children’s education and more. Each saving goal requires a different plan hence the need to come up with your “why”.
Don’t wait any longer to start saving money. Use these tips and do more research to make decisions best suited for you and your needs.
By Wanjiru Muhoro | Writer