The first time I knew what it meant to save money was when I was a child. My uncles and aunts would give me money whenever I came top in my class or when I visited them on holidays. I also received fat envelopes during each of my birthday celebrations.
Every time I was given money, I’ll give it to my mum to save it up for me. I remember vividly the lies she told about setting up a bank account for me to save all the money but we all know that was a trick to pocket my money. If you grew up in a Nigerian home, you know that 'Mommy will keep it for you' is the same as 'never to be accounted for again.'
Since I discovered this trick, I made her actually create an account for me so I could deposit money myself. I also had a phone so I could monitor the alerts. I didn’t have a reason for stacking up all my money. I just knew I always wanted to have a backup, some sort of assurance that, come whatever weather, I have money somewhere. This is how I began my savings journey.
What does it mean to save money?
Savings simply means setting money aside towards a goal. It could be as simple as setting aside N100 daily for an entire month or year or locking up a certain percentage of your income weekly or monthly. Cultivating a savings habit is as important as bathing daily.
For a lot of us, our parents saved up money for everything; school fees, a new car, rent, Christmas clothes, etc. It seemed like they had their finances together but if they hadn’t been disciplined enough to implement financial planning, the family may have suffered the consequences.
Why should you save?
So many reasons. If you don’t know how to manage your finances when your income is little, you may not understand how to make the best of your money when you start to earn more. Even at the time of writing this, my only savings goal remains security. I love that if life decides to happen to me, I won’t be totally thrown off. My phone was recently stolen. Yes, it was painful but If I didn’t have any form of security, it could have completely made me lose my mind.
It’s important to save money for many different reasons. However, if you’re still unsure why it’s such a big deal to save, I’ll let you in on some things to look out for.
Inflation doesn’t give warnings.
The naira keeps losing value, and the prices of things increase daily. You’ll buy something today at N500 and go back to the market to buy it at N700 the next month. It’s scary. It’s pretty unfortunate that in most cases, salaries don’t increase with inflation so it’s in your hands to manage your finances and scale through life using the little you have.
Saving money doesn’t save you and your finances from inflation, saving in a high-yielding interest account does. Moni vault, for example, offers you up to 21% interest on your savings. What this means is that there’s a return on your investment. When inflation decides to go up by 5%, you can’t be bothered because you’re covered.
Life can happen to anybody.
Nobody prays for an emergency situation but, life happens. Life is full of surprises and sometimes, they’re unpleasant. Imagine you lose your phone to pickpockets or your laptop stops working all of a sudden, what will you do without some backup funds? You’ll be more frustrated.
It’s always better to be prepared for these unforeseen expenses and have some savings to fall back on rather than borrowing money from friends and family members. Setting up an emergency fund also helps you manage your budget and track your monthly expenses. You can create a savings plan tailored to emergencies on Moni Vault and even earn great interest while at it.
You don’t need to have money like Jeff Bezos to become financially independent. Saving money prevents you from completely relying on your monthly paycheck to sustain your lifestyle. With enough money in your savings, you can take major life decisions without worrying; whether it’s making career choices, renting a house, getting married, starting a business, or even taking some months off work.
There’s a certain level of confidence and assurance that comes with having money locked up in a safe place.
You want to see the world
We all have dreams. For me, it might be to own a house in Beverly Hills; you on the other hand may want to just tour the world. I know somebody that doesn’t care about things like hair, clothes, cars, etc. She really just wants to hop around and experience different people and their cultures, that’s enough satisfaction for her. She finds nothing else as fulfilling.
Travel isn’t cheap but you can start small. It’s even more expensive if you like to stay in fancy resorts and luxurious hotels. Whatever your dream destination is, you have to prioritize and save for it. Is it Mauritius? Or Zanzibar? Map out how much they cost and plan towards them. You have to be really intentional with your savings to afford certain trips like this.
Who wants to work all their life? Definitely not me, and I’m sure you don’t want to also. But we can’t retire with zero money in the account. The sooner you start saving towards your retirement, the better. Imagine saving as little as N20,000 monthly in a high-yielding savings account at an annual compounding interest rate of 21% for 20-30 years, that’s a lot of money. Don’t underestimate the power of compounding.
Do you know what’s even better? Unlike a lot of other investments that are high-risk, you don’t have to worry about losing your money with a savings account. Save and compound your money so you can retire in grand style.
Irregular or Recurring Expenses
Have you ever felt bad for not gifting a special friend on their birthday because of a lack of funds? Well, it’s a regular occurrence. Sometimes, there’s not just money at the time to spend on gifts because other expenses may have swallowed up your salary so you either send them an apology or just let it go.
Just like emergency funds, sinking funds are important too. They’re usually set aside for recurring costs like birthday gifts, holiday gifts, room decor, home improvements, etc. These extra savings can help prevent you from dipping your hands into emergency funds. A birthday, for example, isn’t an emergency, it’s a celebration so a sinking fund is perfect for recurring costs like this.
Save for Big Purchases
If you don’t like the fine things of life, hands in the air! No hands?
Your savings account doesn’t only have to cater to your needs–it can be for the things you want too. If you earn good, by all means, save towards your dream house or car. Instead of taking a car loan, you can have your savings settle the entire cost. This prevents you from even paying the additional interest that comes with loans.
Save towards that car, that Ikoyi mansion you’ve envisioned in your mind, that trip abroad, anything that makes you happy.
At the end of it all, saving money gives you peace of mind. It makes you feel safe and also reduces your financial stress. It doesn’t matter what your savings goal is, it’s just nice to have to be prepared for the future. I was watching an interview the other day and this lady talked about how she just loves to know she has money waiting for her. This alone is a major goal and it’s enough motivation to keep you going.
It’s good to enjoy life and spend on the things that make you happy but always have it at the back of your mind to set up a savings account for yourself. Don’t let anybody cajole you into thinking it’s a waste of time. No, it’s not.
Nothing feels better than having financial security. Also, make sure to save right and smartly. I have created a guide for you to learn and understand how to save money. Read the article, “A Beginner’s Guide To Save Money” to get all the juice.