How to save

Good Evening and Welcome to #invest10k

#invest10k is a weekly personal finance thread we run at MoneyAfrica every Thursday evening by 7 pm.

This is the third thread in the series. The first was on budgeting and the second on side hustles.

This week, we would be looking at saving. This assumes you have drawn up a budget, and are in a position to keep some money aside.

If you barely earn enough to meet your basic needs, you can refer to our previous threads. It’s either a spending problem or an earning problem.

Depending on where you spin the globe, the word save originates from the Latin word Salvus. The late Latin form is the word Salvare. Old French takes the word Sauver

In plain English, the word save means to rescue, to deliver from danger, to make safe or secure.

You get the gist.

Savings in effect are a backup plan.

This means that everyone should have a form of savings because no one is immune to having an emergency of some sort.

So how much should one save?

Opinions differ. Some would say 3 months. Others for 6 months. Yet a few 9 months. There is no hard and fast rule.

How then should one save? Here are a few steps you can follow.

The first step is to have a goal. How much do you intend to save? How long do you think it would take you to attain it?

If you have an emergency fund in place, then your savings goal can be for something else. Say rent or a big-ticket item.

The next step is to break your goal into small steps. Achieving small steps encourages to keep on it.

The third step is to automate your savings.

This makes the process less painful. Never seen anyone happy when receiving debt alerts.

Have a particular sum removed either weekly or monthly.

If you have a relatively large pay, you can afford to take the sum at once.

If you are a business person, you can opt for a weekly deduction.

The goal of saving isn't to starve yourself. You need to be alive.

Its simply to have a fallback.

Another factor to consider when saving are your dependants.

When you have to plan for yourself alone, it is much easier.

When you have a family, you need to save a bigger proportion. All sorts of things come up.

Kids can be funny. One minute they are all over the place. Next thing a temperature is running.

If you have kids abroad, it’s essential you have some emergency savings in foreign currency.

You never can tell when you have to take an emergency trip to see your child. In the middle of the month.

Your account will most likely not recover from the blow.

Next step is to set a reminder. If you have a smartphone, you can set a reminder on it.

If you are old fashioned and look at a calendar constantly, you can mark a date on it.

You can also treat yourself while saving. So the act of deducting money from your account doesn’t always have to be something you associate with pain.

If you are a salaried person, your deduction a few days after you usually get paid, so the pain doesn’t seem so bad.

The same way many people like to take a cold drink after a long and stressful day.

If you get paid by hand, then you need to open a bank account.

Start with a basic savings account.

When you meet particular goals, reward yourself. #invest10k

Please don’t make the reward, a large one.

Think of it as finger food. Not a meal.

As always, we leave each week with an assignment.

There are no exams. At least academic ones.

The only exam you could face is an emergency.

Sometimes life throws us a hardball. It never says when.

It could happen, that your emergency savings, may not fully cover it.

It is okay. You should have a few investments you can liquidate.

We will start to take a look at investing, next week.

That’s it for this week. If you have any questions, feel free to tweet at us. #invest10k