We all wish for a better life and financial freedom where our bills are paid on time, the mortgage isn’t taking a toll on us, kids are in school, our retirement fund is well-taken care of, and our savings account is busting as well.
It’s quite an uphill task to develop a savings culture when all these responsibilities are yanking at us and can’t be ignored. For instance, you get a monthly income of Kshs 50,000, the taxman will first claim up to 30% of your gross pay, the National Hospital Insurance Fund (NHIF) will take 2% to 3% of your income while the National Social Security Fund takes up to 6% of your gross pay. With all these deductions and any loans that you might be servicing, you’ll be left with less than Kshs 40,000 at best and it can be a hard task deciding on which amount to save and which amount to spend given that the daily expenses were not factored in yet.
Which are some of the ways you can use to start or improve on a saving culture to ensure you don’t get into that extreme debt situation or even worse?
1. Invest in a savings culture
Yes, you should invest in your saving culture by settling your utility on time to avoid any additional costs. You can as well embrace monthly maintenance of electricity and other house systems to ensure they’re running effectively.
2. Settle your debts
It is said one cannot save while in debt. Debt Is taken as dissaving and therefore one can open an account dedicated to debt clearance to avoid using your savings to service any debt. This account has to be separate from your normal checking account to avoid borrowing from the account.
3.Know ‘the why’ for your saving.
This means setting a goal for your savings plan. These goals can be classified into
Saving to a two-month emergency fund
Saving for a vacation
Down-payment for a car etc.
Saving for a 25% house’s down-payment in 3 years
Saving for your children’s education fund
Saving for your retirement fund
Once your goals are clear to you it’s easier to save and develop that discipline to step by step save a coin.
Photo credits: Facebook
4. Make annual payments as opposed to monthly, weekly, or even daily payments.
This applies to various services that come in these kinds of packages. Even as a daily subscription to a TV package may seem cheap at Kshs 50, you may as well save yourself up to Kshs 4,000 by taking up an 80% annual offer for the same package by paying Kshs 14,000 instead of a cumulative Kshs 18,250. These small amounts gathered from annualizing your expenses can be used to set up an emergency fund to hold your back during such hard economic times.
5. Cut down on addictive spending.
If you’re a smoker or drinker, whether an addict or just like to do it for the buzz, you’re spending more than you think. Let’s take the least buzz guy who only smokes and drinks only on weekends just to beat the whole week out of themselves before starting a new week. The same guy wakes up to cut down on the hangovers so they technically engage in drinking or smoking twice a week.
6. Take “staycations”
We all love those outdoors vacations that may be on the beach, in the park, or even just upcountry and away from the city’s busy life. However, the question is, are they really necessary and healthy in your pockets? Not when your saving goals are up on the roof. The idea here is to embrace that in yard simple family activity that requires nothing but a bit of space and your family members around. Chop off those payments for air tickets to fly for vacations in the cost and instead take your time to play with your family or take picnics as you’re not only cutting on costs but you might burn some calories too.
Author: Felix Mbaka
Finance, Economics, and Business
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