Saving in a Tough Economic Climate By: Redeem Govathson, Co-editor of The Corporate Canvas

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“The one valuable lesson I wish I had been taught in school was how to save money.”


I read a statement somewhere which resonated deeply with me, which stated, “The one valuable lesson I wish I had been taught in school was how to save money.” It is not surprising that for most millennials like myself, saving is a tall task. The propensity for a millennial to spend irresponsibly is high since the influence of social media makes it tempting for one to live outside of their means. I mean, who doesn’t want pictures of a lavish trip to Dubai? The need to showcase a glamorous lifestyle makes it easy to see why spending frivolously is “in”. Saving is easier said than done, though, especially when you rely on one source of income. The good news, I have found, is that even when you do not have much; you can always save a portion of the little you have. Here are five tips that will help you get into the habit of spending less than you earn, whilst having some money for a rainy day.

Always have a budget

The easiest way to get into the cycle of spending more than you have is not having a budget. It is not uncommon to have absolutely no idea where your money went. Having a budget makes you reflect on where you need to spend your money and what you may have to forgo. Be aware of exactly how much you have coming in and be deliberate about your spending. Depending on your lifestyle, there will be expenses that you cannot avoid such as your rent, your telephone bill and other utilities. Budgeting will allow you to spend what you have left after you have taken care of the essentials. Additionally, don’t limit budgeting to a once-a-month exercise. Get into the habit of knowing how much you are comfortable to spend daily.

 

Identify where you can minimize costs

Some costs cannot be avoided, but they can be managed well. Simple acts such as preparing lunch as opposed to constantly spending money on takeaway ultimately has a net positive effect on your finances. As part of a weekly routine, it helps to prepare the food you will want to have while at work. In the long run, it will be cheaper to prepare your own food than it will be to constantly spend on take-away. And what is more, you will find you will end up eating much healthier when you have home-prepared meals as opposed to fast foods. There are many ways to cut costs; minimize your data usage, watch your monthly telephone bill or pay only what you have to for cable television. Perform an audit of your monthly expenditure and identify a few services you are paying for that are perhaps unnecessary.

Fix the roof before it rains

This is absolutely my favorite point because I myself am guilty of not doing this. The result is an unexpected burn in the pocket. I have had an instance where I would not have borne a car repair cost if I had just serviced the car timeously. Experience has taught me that it is much more efficient to take care of items than it is to repair them. Maintaining your gadgets and other assets in good condition will save you from having to spend on something you had not budgeted for. That said, taking the best care of your items will not make you immune to risks which is why the importance of insurance cannot be overstated. Get acquainted with the different types of insurance covers you can get and the premiums best suited for you. It could range anywhere from a home loan insurance to a phone insurance. Either way, it helps to be prepared for unforeseen mishaps. That said:

Keep an emergency fund

Even after taking prime care of your assets and taking out insurance against them, it is a good idea to set money aside for a rainy day. Unfortunately and as you know, not all accidents will be covered by insurance (It’s very important to read the terms and conditions of your Insurance Policies). An emergency fund does not have to be a huge amount of money stacked away. It is quite simply the money you will use for the minor inconveniences. Your budget will help you determine how much you will put towards this emergency fund.

Beware of the socialite lifestyle

Finally, the glamour lifestyle is one of the most common traps for a millennial. There is nothing wrong with treating or spoiling yourself, however it has to be within your financial means. Although there is nothing wrong with borrowing, finding yourself in debt or abusing credit cards to fund luxuries is a dangerous financial move. A long term commitment to a debt for shoes, fragrances or even holidays is not smart. It is much wiser to save for these luxuries than lose sleep at night because you are heavily indebted because of them. Another point to note on credit cards is that an arrangement with ridiculously high interest rates is one you may not want to get into. Moreover, avoid defaulting on your credit card payments. This will allow you to avoid being penalized for late payments.

Creating discipline when it comes to money is not easy, but it is an acquired skill that one gets better at over time. You do not have to save a lot at a time; every little bit helps. The above are just some of the habits that I have learnt and still am in the process of learning. Do you have any tips and tricks on how to become more prudent with money? Let us know by commenting below right here at The Corporate Canvas.

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