We do certain things without a prior thought. They become reflex actions or habits. Some habits are positive while many are destructive – one of the destructive habits is arbitrary spending with no saving.
Human nature tends to push us to long for things we don’t need making it easy to spend lavishly. This implies that saving is unfortunately not a natural habit. It takes a conscious effort to train yourself and develop a habit in saving.
As humans, we are wired to naturally run after our desires that money can buy. This desire ignites an emotional impulse that makes us feel we need to acquire those things, especially things we may necessarily not need. Therefore, to develop a habit of saving for the rainy days is a great virtue that everyone should crave.
There are many benefits of saving. It helps you to be prudent and disciplined. However, to be able to fight the human nature of lavish spending, the first step is to make yourself accessible to a limited fund reserved for needs.
To help yourself choose saving money over spending money, consider the following:
- Your Future: You can’t guarantee what the future holds but you can give your future an assured security from now.
- Unplanned Expenses: In as much as we have limited or no influence over certain events that may require expenses, you need to plan for unforeseen circumstances that may incur cost.
- Financial Security: Saving money is the key to developing financial stability.
- Budgeting: Having a budget can improve your level of prudence. It enables you to plan and also encourages you to save and keep a tab on your expenses within a defined period of time. Budgeting is a good way to develop discipline.
Apart from the above, I found this 30-Day Rule as recommended by The Get Rich Slowly Blog feasible.
- Whenever you feel the urge to splurge — whether it’s for new shoes, a new video game, or a new car — force yourself to stop. If you’re already holding the item, put it back. Leave the store.
- When you get home, take a piece of paper and write down the name of the item, the store where you found it, and the price. Also write down the date.
- Now post this note someplace obvious: a calendar, the fridge, a bulletin board. (I use a text file on my computer.)
- For the next thirty days, think whether you really want the item, but do not buy it.
- If, at the end of a month, the urge is still there, then consider purchasing it.
Where then should you put your money? Err, did you say a bank? Well, you might be right. However, don’t you think you deserve more interest rate? Sign up for iSave Plan: It’s an enhanced savings plan that assists in building a lump sum amount over 24 months, while paying a competitive interest rate which is 4% higher than the minimum savings deposit rate paid by the banks.
Features include:
- You are eligible to take up this plan if you are under the age of 65
- Policy term is 2 years renewable
- Interest rate is SDR+4% (SDR is the CBN stipulated minimum savings deposit rate banks can pay on savings accounts and is usually 30% of Monetary Policy Rate (MPR))
- Policy can be surrendered after a minimum of 13 months with no withdrawal fees (earlier surrender will attract charges)
- Minimum contribution of N5,000