Do you have any personal habits? Maybe some of it are less desirable than others. Nail biting? Pen chewer? These things would just automatically occur without you even thinking about it, right? Unfortunately, saving some money is not a natural habit.
It is one of those things that is “very easier said than done.” It is so easy to say that you will save some money every month when you get your pay form your employer. But when the end of the month comes around, there is usually no money left to save. This is a common issue. It happens to almost everyone. That is why it is very important to make yourself develop the habit when it comes to saving money. The most very effective money saving habit is known as “pay yourself first.”
Pay yourself first simply means to set aside a predetermined amount of cash for saving every time you are paid by your job before using part of that money for spending. For example, when Biodun deposits his paycheck every month, he puts N70,000.00 into his personal savings account and the rest of the money into his checking account. The money in his checking account is always used to pay his monthly expenses such as rent, electricity, cable e.t.c. The money in his savings account will remain there until he needs to use it to pay for an unexpected budget or expenses.
This is how easy paying yourself first is! A great place to begin this is to think of savings as a fixed expense (just like rent – it can not be adjusted or ignored) and make sure you add it to your spending plan as an expense. However, like in Biodun’s case, it takes personal willpower to actually move the money into his savings! So, what if paying yourself first actually occurred automatically without you having to do anything at all? It would be even more effective.
Automatic transfers and payroll deductions are the two methods that allow you to pay yourself first and make saving your money completely automatic:
Automatic transfers –
Most financial institutions allow you to automatically transfer some amount of money from one’s account to another account. Nigeria bank has adopted the method too and it can be done in any of their branches. Some even put it on their internet banking platform, so their customers can get it done on their own. So, you could set up an automatic transfer to move some money from your checking account (where your paycheck is deposited monthly) to your personal savings account (where you store your emergency savings fund). You can even select the particular day you want the transfer to occur. The day you are paid is always a good day to choose, and it is advisable to do that on the day so there is never going to be any temptation to spend that fund!
Payroll deductions –
Many employers i know will automatically deduct a set percentage in the amount of money from your paycheck and will deposit it into a financial institution account of your choice.
I have seen that happens many times and it helps the habit of saving a lot.
With that been said, to help yourself choose to save money over spending them, always remember the following:
Always think about your future
You must expect the unexpected expenses
Try to always remember the price of procrastination when it comes to saving of money – you might want to earn some interest!
Develop a good and smart savings habit
Do remind yourself that saving money is the key to developing a great and helping financial security.