When you least expect, your savings can save you. In this article, we will discuss how you can maximize your savings to improve your finances.
Most people can make saving money look like an easy task but this is not the case. A recent survey shows that 30% of Nigerians have fewer savings than N30,000, while 35% have no savings to even discuss. Talk about being the poverty capital of the world. Anyway, the following are some common reasons people don’t save money:
- Too much debt; nothing worse than knowing you’ll have to share that paycheck when it comes.
- Being unemployed; it’s a real pain in the ass if you ask me.
- Living in an area where the cost of living is high; nothing much to say on this. Try living in Victoria Island on a salary of N50,000.
However, though it may sometimes seem impossible to save money, there are simple ways you can cut costs and increase savings. Learn how to save money quickly if you are short on savings. These are some ideas and tools that will help you maximize your savings.
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7 Ways To Maximize Your Savings
It can seem hard at first, especially when you don’t earn much to start with. But these ways I’m about to share with you will help you maximize your savings.
Set Your Target Savings
When most people create a budget, they start with their expenses. Then, they think about saving whatever is left over. That’s like continuing all your current eating habits when you’re trying to lose weight. It misses the point: to cut.
Instead, start with a target savings rate, and the higher it is, the faster you can build wealth.
For example, consider retirement savings. Today’s investment advisors recommend a 15% savings rate for adults looking to work a normal 40- to 45-year career, followed by a 20- to 30-year retirement with a 4% withdrawal rate.
But what if you don’t want to work for 40 to 45 years? Simple: Boost your savings rate to chop away at the number of years you have to work. I’ve known teachers who retired before turning 30 by saving and investing 75% of their income.
The first step is setting a target savings rate. Pick a percentage, look at what that leaves you to spend, and then budget your expenses based on that figure.
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Prioritize Home-Cooked Meals
While dining out can be fun and a great way to meet new people, it can also quickly add up in cost if you go too often. Ordering takeout once or twice per week can add up. You can cook your meals at home for a fraction of the cost of ordering takeout or dining out.
Also, you won’t be paying to tip. You also have greater control over the ingredients and the portion sizes you prepare. This can have health benefits that could save you money on medical bills down the line
If you want to cut down on your expenses, dining out can be a great option. You don’t need to make it a burden if you follow simple recipes and prepare one-pot meals.
Budget With A Guide
Now is the best time to get started with a budget. You can find third-party apps that will help you to get control of your finances and reduce your spending.
While some apps have a price, not all of them do. Mint, an app that offers many features for free, is a good option if you are tight on funds. Mint is a popular app that allows you to see exactly where your money is going each month.
Personal Capital and Qube Money are other budgeting apps worth considering. Qube Money is a digital version of the cash envelope budgeting software. It also offers functionality that allows users to share expenses with other members of their plan.
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Tackle Housing
Housing is the most significant expense in most people’s budgets. But look at it this way; it has the biggest potential to save you money.
There are many ways to “house hack” and have someone else pay your housing bill for you. The classic model is to buy a small multi-unit property, move into one of the units, and rent out the others. You can even build an accessory dwelling unit – whether luxurious suites or face-me-I-elbow-you – and rent it out. Or you can rent out a room in your house; in my first house in Ikorodu, my housemate paid nearly three-quarters of my mortgage.
I know, right?
Well, if you don’t like the idea of a permanent housemate, you could rent out separate rooms.
Reduce Utility Expenses
No loose guard. Bills like to rise, almost like they’re dining on yeast behind our backs.
Make sure you stop them from rising too fast. This includes turning off lights when you leave a space, closing down your computer when you aren’t using it, turning off your TV when you’re not watching it, and turning off the water faucet if you don’t need it.
Other options include taking shorter showers (you don’t sound like Celine Dion, and your neighbors are a hairs-breadth away from mobbing you), using cold water to wash your clothes, fixing leaky pipes, and installing LED lightbulbs and dimmer switches in your home.
Although energy-efficient appliances can help you save money on your electricity bill, they are not cheap. They are still worth considering if you have the money to pay them off in the long term. You might be able to save money on your electricity bill, which could make up for the cost of buying the appliances.
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Danfo Is Best
Transportation is the second-highest expense in most people’s budgets. And it’s far, far higher than most people assume. Even having your own car is not the saving grace you might think.
The cost of owning, maintaining, and driving a car includes not just the car payment, but also insurance, maintenance and repairs, and parking. All of these make a big dent in your budget. Especially maintenance.
And let’s not forget fuel, the bane of transportation today.
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A car is all well and good if your budget can support it. If not, think seriously about living without a car or sharing a car with your spouse, significant other, or housemate. Most people immediately dismiss the idea but take the time to truly think through the implications and what you would give up compared with what you would save.
Could you bike or walk to work instead? Carpool? Take public transportation? Utilize ridesharing programs like Uber and Lyft more effectively. Start thinking outside the box and look for ways to save money on transportation costs.
Boost Your Savings
Boosting your savings rate isn’t only about spending less. You can attack the problem from the other direction as well by earning more. What do you think I’m doing? The trick, of course, is to avoid lifestyle inflation and keep your expenses down even as your income rises.
One way to do this is to get a raise by pursuing a promotion at work. When the time comes, approach your boss for a raise and make a compelling case for your worth.
If that fails, look elsewhere. Often, employees can secure a greater raise by finding a new job than they can by negotiating with their current employer.
Just be careful not to job-hop too often, as it can leave you a less attractive candidate to employers looking to fill a position for the long term. Also keep in mind that starting a new job comes with plenty of extra work as you learn the new company’s technology systems, ways of doing business, company culture, and your new colleagues.
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A Word From Battabox On Savings
There you have it, reader. 7 surefire ways to maximize your savings. Be sure to follow these guidelines to see fantastic results. Also, I should tell you that saving is a marathon, not a sprint, so try not to lose hope at the beginning. You’ll get there.
If you have any questions, let us know below.
