Do you want to be financially stable without changing your lifestyle? Here are a few tips on how to save money to achieve that goal.
Decades ago, all you needed to be financially comfortable is a steady access to food, clothing, healthcare, education and an opportunity to improve your life.
Today, however, the world has evolved so fast and in relatively complex ways so much that many of the world’s population will count internet access, technological gadgets amongst others as a key determinant of the quality of life of an individual.
This has definitely increased the cost of living for the average individual, making it completely necessary to learn some effective tips on how to save money and prepare for a more complicated decade ahead.
Here are few tips on how to save money and essentially prepare for a better future:
Just like anything in life, learning how to save money begins with setting a passionate mission for your financial success. We often find that people enjoy the thought of being wealthy, but fail to make a strong decision with timelines. For many, a financial vision could be the dream to retire at forty years, and so they will take steps to save enough money to make this happen.
In the African context where owning your own home, owning a car, as well as college education for your children lays squarely on the shoulders of the individual, the financial vision of many Africans is to be able to easily afford these things.
No matter what your financial aspirations however, it will be essential to clearly refine your vision as well as timelines for achieving them. You will find that once this is clearly visualized, there will be a renewed sense of motivation to achieve them, beginning with the initial essential step of learning how to save money.
The next step in learning how to save money is to pick out realistic money saving goals. This step requires you to now breakdown your financial vision into spelt out goals that will lead to the desired financial situation over a period of time. So for example, if your vision is to retire at forty, you realize that you will have to save enough to cater for your needs and that of your family for the next forty or fifty years. The next logical question will be what steps to take in achieving this. This may require you saving a sizeable monthly amount for the 20 years of your working life, which in itself will also require you to have commensurate career, revenue and investment goals.
At this point, let’s name our persona who has the goal of retiring at forty Craig.
Craig knows he has to save enough money to cater for his needs and those of his dependants for the next 50 years if he is to achieve his goal. In order to do this, he will have to increase his revenue and retain enough to meet his saving needs. For almost everyone, the first goal in saving money will be to grow your revenue base either by getting an additional job, starting a small business in addition to your main job or switching jobs for more pay amongst other things.
Increase revenue and cut expenditure, this is the underlying trick of how to save money in an effective manner. Most people go through life with the illusion they need all that they spend on. But that’s not true. Almost anyone can make expenditure cuts in their lifestyle.
One of the clear targets in expenditure cuts is the cost of food without compromising your health. Cutting expenditure is also essential because it form about 60% of the total expenditure of the average African, and an equally big chunk of the revenues of families.
For starters you should endeavour to buy food in bulk than on unit basis as it is cheaper. Growing some food yourself, especially vegetables and spices will go along way of reducing your bill on food.
For corporate individuals who patronize eateries and restaurants, considering a lunch pack from home will go a long way to save you close to 20% on food on a monthly basis.
In our bid to make enough money we neglect our health and get fixated on work. Hardwork pays. But when not managed properly, you will likely spend all the money you make paying medical bills for chronic conditions you may have picked up working so hard and neglecting your health.
View your health as an investment and not an expenditure, because a healthy body will always save you lots of money in terms of productivity and less medical bills. Chronic heart conditions, diabetes, respiratory and chiropractic illnesses will impact your revenue so bad that your financial vision may not be met.
Investment solidifies the money you have saved and insulates it from depreciation and inflation. It is one thing to increase revenue, cut expenditure and retain enough money, but you will be shooting yourself in the foot if you do not invest your funds in investment portfolio that will ensure accrued interests. You can invest in treasury bills, mutual funds, bonds, and shares, depending on your level of appetite for risk.
In conclusion, learning how to save money starts from a mind set for success, and an affinity for mitigating against future cost through investment and an attention to one’s health.