Everyone wishes to be rich one day, but earning big is not the one-stop solution to getting rich. Consistently spending less and saving more is the solution to getting rich – rather than earning quick money.
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How to stay focused on your savings goal
Save before you spend
If you save first, your spending will be limited. You must start every month by setting your savings goals and re-investments. By automating your savings and investments, you will reach your mandated saving goal for the month and still have some to spend at the end of the month.
Set Some Money Goals
To motivate yourself to save, you need to set some goals. The clearer the destination is, the easier it is for you to pick a path towards investing in tools that will help you reach it. Long-term goals such as saving for retirement can be met by investing in PPF and Mutual Funds, while short-term goals such as buying a car can be helped by Investing in Debt Mutual Funds or Recurring Deposits. The sooner you set your goal, the faster you will be able to establish a clear path towards reaching it.
Have a Monthly Budget
Have specific details about your goal in one place and create a budget including fixed, non-regular, and discretionary expenses. Then, calculate what you can afford to save and invest based on your financial goals. It’s important to know what kind of discretionary expenses you have so that you can save more money.
Create a Savings Timeline
If you have a savings goal, it’s best to set a timeline to reach that goal. You can use this as motivation for working hard toward your personal financial goals.
Some timelines are simple, such as having a down payment for your house. For other goals like retirement savings and emergency funds, you may want to set benchmarks with specific dates. For example, you may determine that you want to have N10,000,000 in your retirement savings account by the time you reach age 30-40. This goal accomplishes reducing the risk of not reaching the benchmark by the set age.
Use the Right Savings Tool
When you want to start saving money, you should think about which type of account will be best for your savings goal. If you plan to save your money for a few months or longer than five years, consider using a savings tool that will take the burden off you. Savings tools usually have a set time of the month when they’ll initiate an auto-transfer of a specified amount into your savings account or wallet.
Think of Opportunity Cost
What is opportunity cost and how does it help you be committed to your savings goal?
Opportunity cost is commonly known as the suggested alternative course of action that could have optimized the use of a particular resource.
If you want to save money, then compare the benefits and cost of purchase against putting that amount into your savings account in order to determine if it would cost more or less.
Careful With Your Debts
Avoid incurring unnecessary expenses with Loans and Credit Cards. Allocating your income is key to staying out of debt. For instance, if you have an urgent expense and use a Credit Card, create a repayment plan even before you take the loan. Don’t take out new loans to pay back old ones; it could lead to a debt spiral. Always stay on top of payments by paying off debts in full and on time.
Buy Life Insurance
You may not think that life insurance is a priority when you are young. However, life insurance can cover unforeseen situations and help you save some money depending on the type of insurance you get. Short-term life insurance provides a high price for a low premium, with no return. Instead, consider long-term plans that include endowments and money back.
You need a little nudge sometimes to stay on top of your goals. Seek inspiration from outside sources.
Staying inspired about your savings goal can be achieved by looking at financial literacy advocates, successful traders, and businessmen, success stories, listening to podcasts on finances or reading about it.
Stay Accountable to Your Savings Goals
If you’re looking for help, sometimes it’s necessary to look at your network to keep you accountable. Self-motivation is hard; it’s an essential part of successful individuals, but sometimes they need someone else to help motivate them.
It is important to try new techniques and be unafraid to make mistakes.
If you are accountable to someone or something, it is more likely that you will hold yourself accountable.
Setting goals and maintaining discipline are ways to boost savings. Also, keep an eye on your expenses.
How to Save on ALAT?
- Download the ALAT app from Google Play Store or Apple App Store and log into it
- Click on Create Account and select Savings Account
- Follow the prompts. Be ready to input and upload necessary information such as BVN, photograph, Signature, Valid ID card, etc.
- Once your application is successful, your account information will be sent to you.