Financial independence has been the topic of many conversations for the longest time. And rightly so because our entire lives revolve around money. In the 21st Century, it is becoming even harder to go through your day without spending money. That is how serious it is. So while money has meant different things in different stages of human history, the conversation on how to make money and how to save it has always remained consistent and the debate on why human beings have poor saving habits has become more pronounced now especially during this pandemic.
Many blame the modern education system for not being effective enough to teach people how to make money and how to save. Others also blame parents for not teaching their children at an early age how to make and save money. Regardless of which side of the argument you fall on, one thing is true and it is that there is a saving problem that needs to be addressed.
According to Forbes, “Saving money can be challenging, especially if you’re just getting started in your career.” This is very true when one considers that forming successful saving habits comes with self-control and being able to trade instant gratification for later. However, “if you can start saving now while you’re young, no matter how small the amount, it could be one of the best financial decisions you make.” – Halsey Schreier.
So while self-control is a key element in forming successful saving habits, deliberate planning also helps achieve good saving results. We hope that the following five (5) tips from Forbes, CNBC, and Cashasap will help you develop a saving strategy as you work towards financial independence.
Have a Plan: Planning is everything. Sometimes your failure or success in saving starts here. It would be ludicrous to say you are saving and do not know what you are saving for. Set goals and work towards meeting them. You need to know whether you are saving for a car, a house, your wedding, your masters, your child’s education or to invest.
Have a Budget: It is very important to have a budget. You need to know how much money is coming in (income), where it is coming in from, and how you spend it (expenditure). But knowing that budgeting is never really taught in school, you could consider paying for masterclasses to learn how to make an effective budget. Also, stick to your budget and when opportunities to spend less or avoid spending come by, take them.
Be Wise with debt: It is important to know that not all debt is bad. However, if you are going to get into debt, make sure that it is healthy debt and it helps you acquire assets. Furthermore, make sure that high-interest debt is prioritized because debt interests that pile up can affect how much you save.
Work on Self-Control: Self-control is key in the conversations about saving. For most early career professionals or young people in their 20s, having fun and spending is usually a priority because these are the years for exploration. However, it is important to save money even in this particular stage of life. This means you will need to learn to postpone current and temporary gratification for future and meaningful plans.
Have Multiple Sources of Income: This is a hard one but it must be addressed. It’s clear that the more sources of income you have the more you will be able to save. Looking into the lives of millionaires and billionaires of this world, it is clear that they thrive on multiple sources of income. This is important to work on because the truth is that needs, wants, and responsibilities pile up as one grows. You will need to pay rent, service debt, take care of your family, upgrade your education, travel, and help other relatives. And if you depend only on one source of income for all these demands, then you may never save.
Now, the subject of creating multiple sources of incoming is another broad one that must be addressed independently but a few quick tips are that you can engage in entrepreneurship and take advantage of known investment areas like stocks, real estate, etc. You could also explore how to monetize your skills.
There are many other tips you could read about on the internet. But the above-mentioned tips are central to every saving strategy you could establish. “Saving doesn’t come naturally to most of us. When you’re young, it’s hard to grasp the real value of money. Once you’ve spent two or three decades on earth, you start to understand how hard it is to make money. You also learn how unpredictable life can be. Without savings, it’s hard to live a stable life as you get older.” – Modest Money.
In conclusion, always remember that saving a coin a day is better than having no coin saved at all. So regardless of your current income, develop a deliberate strategy to save. You will be happy you did.