It can be depressing, not being able to afford things that we believe are pressing. Whether it is a PlayStation or an apartment closer to work, they all seem equally important and would at least elicit the same amount of satisfaction. Or would they? Knowing what needs are essential will help us determine what needs should be met first and what frivolities shouldn't be entertained.
So let's jump into the matter, let’s show you how to save with purpose consistently.
1. Start with self-discovery: Saving for savings’ sake will always be difficult. There are 1,001 ways to spend money now that are appealing to our senses. Knowing yourself and your aspirations will help you save towards these goals. Saving towards your career, emotional and spiritual goals can boost your ability to forgo spending a little longer.
2. Learn how to budget: It is important that our personal finance is spread into pockets and percentages that ensure that our goals and sustenance are looked after simultaneously. The time-tested personal finance budgeting ratio is 40:30:10:10. 40% of your income should go to your daily expenditure and utilities; 30% for savings; 10% for emergencies and 10% for enjoyment or relaxation. This may differ for people who have dependents or have religious financial obligations. Basically, budgeting your income will help you make critical decisions easily.
3. Compare costs and value of alternatives before paying: surveys have shown that many buyers end up with buyer’s regret. This regret can stem from discovering a less expensive alternative or realizing that your purchase did not live up to the advertiser’s hype. By creating a spreadsheet of alternatives to purchases, comparing the value at their price ranges, you’ll make informed decisions and will most likely avoid unnecessary expenses. For example, paying annual rent in a self-serviced apartment in a remote part of town may seem cheaper than paying monthly in a serviced apartment in the more expensive parts of the city. But further analysis on cost and value of easy transportation to work, money saved on transport, fueling one’s generator and maintenance, furnishing the home, paying monthly bills etc will immediately show you that your savings will be eroded by some of these values if neglected.
4. Set Savings goals: Even with a lot of motivation and discipline, walking around town with a lot of money can be tiresome because everything jumps at you. Ticking off milestones at which you convert your savings to assets are important. Setting savings goals for when to get that device that will improve your small business or take a course for greater productivity, will keep you fueled and purpose driven.
5. Keep a vision board: having a vision board in your room, or posting clippings or printouts on your mirror, helps you visualize your goals and keep saving towards them. Posting clippings of career awards you intend to win in the near future or a picture of the efficiency tool you aspire to purchase will keep you passionate about your goal.
6. Get creative: Start saving with a piggy bank (or what we call kolo) or get a savings app that allows you transfer money by direct debit. Maybe you can save in stocks or bonds instead of just a savings account in fiat currencies. Whatever your choice, get creative to keep your saving motivation up.
Investment is a tricky subject to discuss. We will ensure to talk about it more in future installments. Our cautious advice is to only invest in what you truly understand and only amounts you can truly afford to lose. Let us know in the comment section, what you think about and find difficult with having a savings culture.
Disclaimer: we are not financial advisors. You should see an expert familiar with your peculiar financial position before making certain financial decisions.