Saving money when your income is in the five-digit range can be very difficult. Also, the Central Bank of Nigeria estimated that only five per cent of the banking public had N500,000 in their accounts as at the end of 2016.
If your income is at or below that median amount, you may be finding it difficult to save any money at all. However, financial analysts argue that saving money, even on a smaller income, is possible with a little creativity. Here are some tips for helping those living on a lower income to increase their savings rate.
KEEP HOUSING COSTS AT BAY
Housing costs are usually the biggest expense a person or family has. Between the cost of a mortgage or rent payment and the cost of utilities, repairs and upkeep, housing costs can drain a budget quickly. By keeping housing costs low and not buying or renting more than you need, you’ll have more money available for saving.
For instance, a financial analyst, Dr. Peter Adebayo, explains that the general rule is to keep total housing expenses below 35 per cent of your take-home pay. Here are some more in-depth ideas that can help save money on housing, according
For renters: Find cheaper housing, if it’s available. Talk with your landlord about trading work on the property for a reduction in rent. You, as a tenant, may take up the job of a property manager with your landlord. This could either ensure free rent for you or partly defray the cost of the house rent you pay.
For homeowners, he says, “Keep an eagle’s eye on utility costs and cut down wherever possible. Keep lights off; don’t waste water, maintain the house and keep it in good condition to avoid costly repairs, and avoid upgrades that aren’t necessary.”
Not only will incurring debts mean that you have more to pay from your monthly income, it also means that you’re delaying your financial freedom, especially when you are paying interests on the debts
STAY OUT OF DEBT
Not only will incurring debts mean that you have more to pay from your monthly income, it also means that you’re delaying your financial freedom, especially when you are paying interests on the debts. By avoiding debt or working to pay off the debt, you can put your money into savings instead.
REDUCE ENTERTAINMENT COSTS
Eating out, hitting the bar after work, going to the movie theater and other entertainment centres to do purchases can cause a big dent on your budget, pretty quickly. To help keep entertainment costs low and still have fun, Adebayo suggests, “Have potluck dinners at home instead of gathering at restaurants, have movie nights at home, complete with popcorn and soda, take advantage of free forms of entertainment such as hiking, biking and free city activities.”
- Keep housing costs at bay
- Stay out of debt
- Reduce entertainment costs
- Get a handle on grocery expenses
DON’T SPEND RECKLESSLY
Many times budgets take a hard hit and savings suffer due to unnecessary expenditure. Temptation to buy unnecessarily can also come in the form of peer pressure from those around you, who spend with reckless abandon or from kids who want things that “everyone else” has. Try and avoid this temptation.
Get a handle on grocery expenses
The average amount of money a family of four spends on groceries is estimated at nearly N40,000 a month, but with a little planning, it’s not unreasonable to be able to cut that figure
“Instead, make a menu plan each week and stick to the plan when you shop, plan your weekly meal menu around what’s on sale at local stores, avoid frivolous food purchases such as soda and chips (you’ll improve your health by cutting out the junk food), and learn to cook from scratch, instead of buying pre-made or processed meals and snack foods,” he
This might sound impossible but give it a shot. It is the best way to save more money, no matter what your income is. By having a specified naira amount come out of your salary account into a retirement or non-retirement savings account before you even see it, you’ll simply adjust to living on what is available and start saving money with little to no effort on your part.
Saving money, especially on a low income, has been proved possible. That is why in some blue-chip companies in Nigeria, while senior managers rent buildings in highbrow areas, their drivers own properties in rural areas and in some cases own car(s).