The best way to be in charge of your finances in Nigeria’s uncertain economy is to accumulate a healthy savings account. A healthy savings account is not the regular savings account your bank operates, except the Fixed Deposit, because that is exactly what is being referred to. We all do not want that feeling of stress that comes with the knowledge that we are only a paycheck or two away from financial disaster just because we lack money to fall back on when “shit happens,” and shit really happens in several instances, like a job loss, disability, a car breakdown, a sick relative, and several other types of financial emergencies that get to you, per your existence. When you start saving, you know you have a financial “backbone” for most of life’s uncertainties, and it also increases your feelings of security and you get to relax because you have peace of mind. Even if you do not want to save, being Nigerian alone should make you have a rethink. The good thing in saving is that it operates as an emergency fund account (that is if you are not already saving for something else, like buying a new car, for education, or to purchase a land) which once greased enough, can be used for high-yielding investments like stocks, bonds, and mutual funds.
There is also evidence from some recent studies that savings are linked to increased happiness. Actually, what the study found was that people who are “planners” and do future-oriented things such as setting goals and saving money to achieve those goals feel happier and better about their lives than those who do not make plans. On a related note, there is a strong relationship between having a spending and savings plan and maintaining emergency funds. Economists and psychologists credit findings like these to the sense of control people have when they plan ahead and know what they need to do to get from where they are to where they want to be.
People, especially Nigerians, get encouraged to develop and implement personal saving plans by most companies via many commercials. These companies simply want people to build wealth, instead of accruing debt. But for many, it is just a social marketing campaign, but what if it is? The core point is to change people’s behaviour, rather than sell them their brand. The best thing is to compare these different companies and go for one that suits you. The end result is to get people to embrace the culture of saving to improve their future financial security, that of their families, and even that of the country.
So how do you get started as a saver or ramp up your current level of savings? You first have to go for the goal! It is easier to save for something specific than to save just because you want to. That is because, for any reason at all, you may just decide to withdraw from it as there was no reason attached to such savings. When you finally decide to save, you also have to specific to it. Make a plan and ask yourself how much it is that will be enough for your goal, and how fast can you hit it? To calculate how much you need to save to achieve a goal, you can divide the amount you need to save or invest by the time (let’s say, number of months) you have left to save. If, for instance, you want to save ₦2,000,000 by next year, you will need to put aside ₦166,667 (₦2,000,000 divided by 12) a month, or ₦38,462 (₦2,000,000 divided by 52) a week. In our earlier discussions, we talked on the importance of saving early, among which was (and still is) the benefit of compound interest as it favours earlier savers.
In today’s world, aside from the older generation of Nigerians whose method of savings is the kolo (piggybank) or through adashi (a savings cooperative), Nigerians now prefer using digital mediums to save. Popular amongst them being PiggyVest, Cowrywise and Fundall. An emerging platform like Investa sees itself as a digital cooperative set up in the same way and fashion like those our parents are members of, only that Investa is fully digital. Whether you want to save individually or in a group, Investa makes it possible. In all, these platforms act as guides and allow you to set goals, on a virtual worksheet and calculate your savings, whether short, medium or long-term. They also help you to invest your money and reap returns on your investments, meaning you get to kill two birds with one stone. Indeed, there has not been a better time to start saving and investing, than now.
AUTHOR PROFILE:
Kator Tarkaa is a budding investment writer. He enjoys writing about real estate, businesses and finances, especially as it concerns youths. He loves marketing products and a healthy savings account is not the regular services via social media.
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