If I did a general survey to find the number of people who are dissatisfied with their income, I am certain a good number of people will assert that their earnings are not enough for them to live comfortably on and as such, will advocate for a higher pay. Now, if you asked this same set of people whether they practice the habit of saving, they’d most likely say to you: “The money is not even enough to accommodate all my needs. Don’t tell me you expect me to still save out of this”. This kinda statement would probably be followed by a sad sigh and a shake of head.
Trust me; this is the reality of what goes on around us. Many individuals – be they salary earners; business owners ranging from small kiosk traders to small-medium enterprise owners, employers and market traders; the average man on the street and even students – will readily declare that they don’t earn enough to live on, let alone save a portion of the already inadequate funds available. Saving, though a very important habit, is not one popular with many people. This is mostly attributed to the belief most hold – the belief that they do not earn enough. . In this article, I will attempt to dispel this popular, yet false, belief.
To start with: Why is saving important?
Saving money can help you become financially secure and provide a safety net in case of an emergency. This is one major benefit of saving. The more money you have saved, the more you feel in control of your own destiny. So, if your job has you on the verge of a nervous breakdown, for example, you will find it easier to step away for a bit, even if you do not have another job in the offing. You will be able to take some time off to restore your sanity before you seek new employment.
Also, in the event of an emergency health condition whose treatment is time-bound and maybe expensive, you will have a way to pay for it. You won’t be compelled to hang on to your job, stressing yourself out while you should be taking time to recuperate. Merely knowing that you have options because of the money you’ve stored away can considerably reduce your anxiety level about the situation
Think of what typically happens when a person is laid off from a job. Sometimes, it could take up to two years to find a new job, especially in economies with a high rate of unemployment. If a job loss were to happen to you, your savings are what you will fall back on to tide you over till the next inflow.
Let’s bring your children into the picture now….
You would like your children to attend good (and definitely not cheap) schools, don’t you? Your savings ensure you can consistently afford such. Do you look forward to going on exotic vacations, to buying your own land and building your own house? Do you want to retire well? If you do, then you have a lot of wants and aspirations that definitely don’t come cheap. It’s more than enough reason to begin saving now.
Do not allow yourself to refuse to save because the amount you will be putting away seems too little to be able to get you your desirables. Remember the popular saying: “Little drops of water make a mighty ocean.” You’d be amazed at how far the little trickles of savings you have put away will go when you desperately need to draw on it. You will sleep well at night knowing that you have enough financial backing and in the case of any emergency, you are covered.
Now that we have explored a few benefits of saving, the next question to answer is: “Is my salary too small to save from?” I will help you to answer this question by restating a popular quote that goes thus: “It’s not about how much money you make; it’s how you save it!” No matter how little you think what you earn is, your first priority when you get your monthly pay cheque should be to remove the amount you plan to save first. It’s up to you to decide what percentage of your income you want to save. However, experts recommend that you save at least 30% of your income. The rest of your income may then be allocated to your many needs according to their level of importance to you. I know! You have a lot of needs and removing a whole 30% seems really tasking. But think about it…
Aren’t human wants unlimited and insatiable in relation to the resources that we have at our disposal? Clearly, even if you start to earn N100 billion a month today, some of your wants would still be left unmet. Because you will graduate from desiring things that your former salary could comfortably afford to wanting those luxurious and expensive things that your current salary seems like it can accommodate. You’d suddenly go from wanting a new bag to wanting a state-of-the-art private jet. It is simply human nature to keep wanting and wanting things. Unfortunately for that nature, we can’t get all that we want. So, we must devise a means of getting the most important things first while leaving the rest until a later time. Setting aside a chunk of your salary to save will only mean that you have to re-calibrate your scale of preference. In other words, those things that would ordinarily be available to you will reduce, but only temporarily. Some of the things you want will be achieved while the rest would be left unrealized. So conceptually, there’s only going to be a little, barely noticeable, difference in your lifestyle when you decide to start saving.
To drive home this point, permit me to tell you the story of my friend. Let’s call this friend Anna. A few years ago, Anna was an intern in an investment organization where she earned about N10,000 monthly. She always complained about how paltry the money was and how she was unable to save because of all her numerous needs. A few months later, Anna got a new job at a financial services organization and began to earn N80,000 per month. Believe it or not, Anna still struggled with developing a saving habit despite the fact that she had started to earn 8 times what she used to. She continued to complain of her numerous needs and how the money she was earning was not enough to take care of all of them. Did I mention that Anna didn’t take on any new financial responsibility during the period under review? Her needs simply increased as her salary increased.
Don’t keep waiting until you figure you should have started earning big before you begin to save. Start now!
Even as a student, you should be able to save a fraction of whatever that is given to you as your allowance. Don’t wait until you start earning actively before you start saving. Decide now to make the necessary lifestyle adjustments for saving effectively and successfully.
I’ll end this article with a quote by famous billionaire investor and businessman, Warren Buffett viz:
“Do not save what is left after spending but spend what is left after saving.”