3 Steps to Saving Money

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As the Saying goes; “Save for rainy days” here’s 3 steps How to…

All of us have been told countless times that we need to save. There is no one who disagrees with the concept of saving money but how many of us actually save? I wish I could start this article by telling you how well I save and how my egg nest is nicely growing but I am one of the culprits; the one who knows what needs to get done but never really gets to do it.

I have read two passages in the bible that have offended me so much. The passages offend me with the truth and it stings because I couldn’t find a way to sugar-coat its message.

The first one is Proverbs 22: 7 (New International Version) which states, and I quote,

“The rich rule over the poor, and the borrower is slave to the lender.”

Am I a slave? I have borrowed money but does that make me a slave?

The second passage is in Proverbs 21:20 (New Living Translation). It states, and I quote,

“The wise have wealth and luxury, but fools spend whatever they get.”

First this book calls me a slave for borrowing money and now it calls me a fool for spending whatever I get.

These passages offended me for a while and then being the thinking being that I am, I started considering the truth in them and this brought me to the woman in the mirror. There are a lot of sophisticated reasons why it makes sense to borrow money. Concepts such as leverage, time value of money, IRR (internal rate of return), etc. make a lot of technical sense but when all is said and done, I find that none of these concepts have the power to change behaviour.

To win with money, you have to deal with your actions. We all think the right things (at least most of the time I hope), we have intentions to succeed with money and we take decisions but most of us are disappointed by our impulsive decisions to purchase. Our lack of judgement, excitement, or proving a point to the Joneses’ or Mkhize’s.

If you spend everything you get then you have nothing to save. Today is the best time to start with your savings plan. If you wait for all the stars to line up before you commit money to your plan then you will wait forever. Before you even get into the 3-step process, make sure that you understand your WHY you are saving money. It is not just the WHAT but the WHY. What is your reason for saving the money?

1. Please save something:

As a start, it doesn’t really matter where you save (as long as your money is safe: the mattress or digging a hole in your backyard is not an option) but it is the principle that counts. Regardless of how much you earn or get in pocket money, you take 10% of the money you receive and you put it in a savings account. This is the first payment you make before any other payment (except your tithes if you are tithing).

I can hear the screams: “But I have to pay for my car, or my clothing account, or the furniture shop!” I just want to find out if the car, the sofa and the dress will be taking care of you when you are old and penniless or when you can’t earn an income anymore? It is so easy to focus on pressing needs, but you need to consider your long term goals when you spend/invest your money.

2. Be consistent with your savings:

Don’t just save once and don’t tell yourself that you are waiting for a lump sum or you are waiting to clear your debt. Use the lump sums to clear the debt if you have any but as for savings just apply a simple principle of ‘OF ALL THE MONEY THAT COMES TO ME THEN TEN PERCENT GOES TO SAVINGS’. Don’t try to save 20% when you still have debt but just do 10%.

This is so little because it simply means for every R10 you get you save R1, not R4 and not R6 just R1. Come on Nunnovation readers, we can all do this. Spend some time and do a bit of Mathematics. Take the number of years you have been working, multiply by your annual Net salary and divide by ten; this will give you an idea of how far you could be.
If you have worked for ten years with a Net salary of R250 000 then you could have R250 000 in savings and we are not even talking the growth of your money and interest earned yet which will take this figure up.

3. Don’t spend your savings: When your savings begin to grow, there will be many temptations, nice outfits to buy, never to be repeated sales, the vacation special of a lifetime, etc. Always ask yourself why you are saving.
Savings give you options in life, the kind of options that will make you not to sell your soul for a job or a business deal or a place to stay. Discipline with money will also overflow into other areas of your life, so start saving now and refuse to be a fool. Refuse to spend all you get.

Let’s just get rid of all the excuses and start this month-end. Cancel the pay TV if you must, downgrade to a cheaper supermarket, stop going out, and no data bundles for you but at the end you must find ten per cent to put towards your savings.

By: Mantsha Pheeha

www.nunnovation.com