Sometimes the hardest thing about saving money is just getting started. This step-by-step guide for how to save money can help you develop a simple and realistic strategy, so you can save for all your short- and long-term savings goals especially as you’re about to begin your National Service.
The first step to start saving money is to figure out how much you spend. Keep track of all your expenses—that means every gari and beans, household item and public transport fare.
Once you have your data, organize the numbers by categories, such as transport, groceries and rent, and total each amount.
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Once you have an idea of what you spend in a month, you can begin to organize your recorded expenses into a workable budget. Your budget should outline how your expenses measure up to your income—so you can plan your spending and limit overspending. Be sure to factor in expenses that occur regularly but not every month, such miscellaneous expenses.
If your expenses are so high that you can’t save as much as you’d like, it might be time to cut back. Identify nonessentials that you can spend less on, such as entertainment and dining out. Look for ways to save on your fixed monthly expenses like television and your cell phone, too.
Here are some ideas for trimming everyday expenses:
- Cancel subscriptions and memberships you don’t use—especially if they renew automatically(Netflix & Apple Music).
- Commit to eating out only once a month and trying places that fall into the “cheap eats” category.
- Give yourself a “cooling off period”: When tempted by a nonessential purchase, wait a few days. You may be glad you passed—or ready to save up for it.
One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for—perhaps you’re getting married, planning a vacation or get your Masters degree. Then figure out how much money you’ll need and how long it might take you to save it.
Here are some examples of short- and long-term goals:
Short-term (1–3 years)
- Emergency fund (3–9 months
of living expenses, just in case)
- Rent after service
Tip: Set a small, achievable short-term goal for something fun and big enough that you aren’t likely to have the cash on hand to pay for it, such as a new smartphone or holiday gifts. Reaching smaller goals—and enjoying the fun reward you’ve saved for—can give you a psychological boost that makes the payoff of saving more immediate and reinforces the habit.
After your expenses and income, your goals are likely to have the biggest impact on how you allocate your savings. Be sure to remember long-term goals—it’s important that planning for retirement doesn’t take a back seat to shorter-term needs.
Tip: Learn how to prioritize your savings goals so you have a clear idea of where to start saving. For example, if you know you’re going to need to replace your car in the near future, you could start putting money away for one now.
Almost all banks offer automated transfers between your checking and savings accounts. You can choose when, how much and where to transfer money or even split your direct deposit so a portion of every paycheck goes directly into your savings account. If not, make a conscious effort to save immediately your allowance drops. This can be done using e-banking such as mobile money or apps of your banks. Standard Chartered has one of the coolest e-banking systems in the country.
Tip: Splitting your direct deposit and setting up automated transfers are simple ways to save money since you don’t have to think about it, and it generally reduces the temptation to spend the money instead.
Review your budget and check your progress every month. Not only will this help you stick to your personal savings plan, but it also helps you identify and fix problems quickly. Understanding how to save money may even inspire you to find more ways to save and hit your goals faster.