Whether you're well-to-do or not, saving and being disciplined is the only way to get that dream home, car or holiday. It's also key to ensuring that you survive an unforeseen bump in the road and that you have enough money to live comfortably when you retire.
In theory, saving seems like the simplest of things. All you have to do is put away a fraction of your income, right? In reality, you probably spend it as fast as you make it, and even when you do save, you probably end up dipping into your reserves for one reason or another. That's life. But how do you make sure that you break that cycle in 2018 and reach your saving goals? Here are some handy tips.
Master budget: You don't have to have an exact, super detailed budget. But it's good to have a general view of your income and expenses by creating a master budget. This would ideally consist of your income after taxes and your essential living expenses (rent, food, school fees, transport expenses, etc). If you then subtract your essential living expenses from your income after taxes, you will know how much money you are left with each month. Hopefully, your essential living expenses don't eat up more than 50% of your income. A good principle to follow is the 50/20/30 rule i.e. 50% of your income after taxes should be spent on essential living expenses, 20% should be put in savings and 30% can be used for flexible spending (that new suit you need for work, dinner out with friends). Of course, this is totally dependent on your income but whatever percentage you settle on, stick with it!
Piggy banks aren't just for kids: While putting away a lump sum every month may seem daunting, putting away a tiny sum daily is anything but. If you were to put Ksh 20 into your piggy bank every day, you would end up saving Ksh 600 a month and Ksh 7,200 a year. Now imagine your cushy amount if you stashed Ksh 50 or Ksh 100 a day! They say, a little goes a long way so piggy banks remain a powerful tool for saving.
Wish Lists (aka Lust List): If, like me, you are a shopaholic, a great way to stop yourself buying things you want but don't need is what I call a lust list. Whenever I suddenly want something that is beyond my budget, I put it on my lust list and allow some time to pass to see whether I still desire it. In most cases I completely forget about it. But if I just can't get it off my mind, I will use my piggy bank money to buy it. That way, I avoid impulse buys and my savings remain intact.
There is an app for everything: In this day and age, you can probably find an app for anything and your saving goal is no exception. I highly recommend the Wallet app which is the best available personal finance and budgeting app for both Android and iOS users. With this app, you can track your cash, bank and savings accounts, and set limits for any expense. The app notifies you when you are about to hit your limit.
Enjoy your money: Having a savings goal doesn't mean you have to bid farewell to the things you love. It is about guaranteeing that your tomorrow is at least, if not more, comfortable than your today. So, as you budget, be realistic about what hobbies are important to you and enjoy them in moderation. That way, your nest egg and your peace of mind can grow.
