In today’s hard economic times, saving money is extremely important yet can appear unachievable. Many people are living paycheck to paycheck, while others get into debt to cover their bills. The rising cost of living coupled with stagnant wages leaves people struggling to set aside money for savings. However, with effective strategies, anyone can save money regardless of economic situation or income level.
Here are 10 realistic and simple ways to save money for future financial security.
Track your expenses
The first way to save is to determine where your money goes. Mobile payments and credit cards are among the major contributors to overspending. Retrieve your bank statements and mobile payment history to ensure your account for everything. Record all the expenses using a pen and paper, a spreadsheet, or an app.
Organize the expenses into categories, including groceries, housing, transportation, and clothing. Then, identify the expenses that can be trimmed. Tracking your expenses is an excellent way to find the excess money that is going to waste.
Trim your spending
If you’re struggling to find money to save, it might be necessary to trim your expenses. Cut all unnecessary expenses from your budget. The best place to start is the nonessentials, including eating out, entertainment, and vacations. Find ways to cut your fixed monthly bills, such as cellphone bills and car insurance.
Wait before you buy nonessential items – you might realize you never needed the item after all. Cook at home and carry your lunch instead of eating out. Downsizing the biggest expenses, such as transportation, housing, entertainment, food, and utilities, can produce the fastest outcomes.
Incorporate savings into your budget
Once you’ve reviewed your expenses, it’s time to create a budget. Savings should be an integral part of your budget. The money set aside for saving doesn’t have to be much. The standard budget rule is to save approximately 20% of your income. Plan to save what is comfortable for you. Start with as little as 50 shillings every day. Aim to eventually increase the savings as your income grows. Use apps such as Mint, Goodbudget, and Firstly to create your budget easily.
Set saving goals
Start off your journey to save money by setting specific goals. Determine what you’re saving for, like a new smartphone, a new car, or a family vacation. The saving goals can either be short-term or long-term.
It is prudent that your saving goals be smaller and achievable. Attaining smaller goals gives you the psychological boost to save even more. Use money-saving apps offered by banks to formulate goals and add money to them.
Automate your savings
Automating savings is one of the powerful ways to achieve your saving goals. Currently, banks facilitate automated transfers between the transaction and savings accounts. Determine when to transfer and how much to be transferred. Assign a portion of your paycheck to go into the savings account. With automatic savings, you can overcome the temptation of inadvertently spending what is meant for savings.
Join a Chama (merry-go-round)
Chamas presents an ideal opportunity to save in Kenya. The merry-go-round groups are common types of chamas. The group meets weekly or monthly to collect contributions from members. At every meeting, the collected money is given to one of the group members.
By joining a Chama, you can save and get your money in a lump after several weeks or months. Make sure you join a group with good governance and a manageable number of members. Always check the group agreement before you join.
Pick the appropriate tools
There are different savings and investment accounts that allow your savings to grow. Identify the options that best suit your savings goals. High-yield savings accounts offer the best option to get higher returns for your savings.
Other options include basic savings accounts, fixed deposit accounts, individual retirement accounts, and securities. Compare all available options and consider the minimum requirements, applicable fees, interest rates, and process of withdrawing money.
Increase your income
If you are interested in saving money but can’t trim your budget, increasing your income is crucial. The extra income allows you to meet your needs and find money to save. There are various ways to generate new income, such as side hustling, freelance work, part-time jobs, negotiating your current salary, and finding a new job.
Pay your debt
Debt, especially high-interest debt, can limit your ability to save. The interest accrued from the high-interest debt may plunge you into severe financial hardship. Prioritize on meeting your monthly obligation of any high-interest debt to save money on interest. After clearing your debt, aim to live within your means and save more.
Monitor your savings
Examine your budget and monitor your progress on a monthly basis. This helps you to identify and address problems. Additionally, monitoring the savings allows you to stick to the savings plan. Overall, understanding the ways to save money will go a long way toward the achievement of your financial goals.
