With everything seemingly so expensive now, saving money could be tough these days.
Besides, if you're starting your New Year unhappy about your savings account, you're not alone since many people have struggled to save due to exorbitant living costs. If you had to dip into your savings to stay abreast with the bills, you are already a step ahead if you managed to avoid debt. However, you put a dent in your savings and you may need to consider ways to restore the savings and other options to help you manoeuvre through the tough economic times.
This year could be challenging still, but it does not have to be an uphill task to save money.
From earning extra cash to cutting back on expenditures, saving money is crucial to building your financial security. And even though it may be a huge hurdle to put more money into savings if you are stretched out, there is always a way to boost your savings rate.
Below are some tips that you could consider towards making that happen for you.
Creating a budget is the first step towards being able to distinguish and separate wants from needs.
As a matter of fact, a budget is the only real way you can be able to cut out wants and prioritise your needs. One issue, however, is that the distinction between wants and needs is a bit fuzzy especially when the wants are on trendy stuff like getting a new phone when the one you have is working all right or taking an expensive vacation during the holiday season.
When separating your wants and needs, look to see if some subscriptions, for instance, are necessary.
Tip: Practically, consider implementing the changes for like one month without one of those subscriptions to see how well you can do with or without it.
If the difference is negligible or non-existent, you most certainly have a want rather than a need.
Something to note is that setting a budget may not reduce your actual expenses but it definitely will make it easier for you to understand where your money is going. With this, you can then find ways and methods to cut costs. There is a common misconception that living on a budget translates to living a miserable life ‘pinching pennies’. It is not.
Since this is about improving your financial lot, look at this guide on the differences between savers and spenders. This will help you learn a little more about how spenders or savers can improve their financial status.
Tip: If budgeting is new to you, don't panic because there is a variety of budgeting apps that help to make the process simpler. The good thing is that many of these budgeting apps are free.
You could also go old school if you don't feel the need to use an app by keeping track of your bills and spending using either a spreadsheet or even writing down your expenses on paper.
Read Also: The 30-30-30-10 Budget of January & Beyond
Automating contributions to your savings account makes things easier for you since the money will not have to go through your hands. This is one option you can consider to help you with your saving habits.
Because your savings are taking place in the background, you won't be tempted to use them to fulfil one of the demands that may crop up. Using this method is applicable to all income levels because automatic savings accounts allow you to save whatever amount you wish each month.
Tip: To accelerate your saving rate in 2023, consider setting up automatic monthly contributions to your savings account. This is not only practical but it could also make it simpler for you to accomplish your goal.
Any saving, however small, is still a saving. Imagine how you could improve your savings by cancelling services that cost you a few hundred or thousand shillings every month and then put this money into your savings account. If you saved a thousand shillings every month, you’d have Ksh12K at the end of the year.
This could boost you in the long run even if it is in offsetting some bills or putting it into an account that earns you interest on your savings.
Tip: Consider eliminating a significant expense that could help accelerate your saving target. This could include moving to a new and cheaper apartment. Again, if you rarely have to go to work because of working from home, you could consider selling your car if you don’t need it to get by. This could save you a lot of money which you could put into a savings account.
If inflation rates remain high, living expenses could be high in 2023. Because of this, you could still struggle to reach your savings goals even if you're sticking to a budget and eliminating certain significant expenses.
Tip: With the reality of an ever-increasing cost of living, you could consider taking up a second job or starting a side job which could be beneficial.
The appeal of a side business is that your income won't go toward paying off debt. You can put the surplus money into a savings account which could come in handy on a rainy day.
Read Also: Side Hustles to Prepare For In 2023
Online, there are many opportunities focused on helping people to save money. But the kind where you steadily raise the contribution amount is one that is very prevalent.
Tip: Think of a scenario where you save Ksh1K the first month and contribute an additional 1K each consecutive month. Your monthly savings would be at least Ksh12K by the twelfth month. Even though this may not be a lot to talk about, it is still a good start toward saving more for your savings goals.
Even if changing your mode of transportation could be challenging, consider your options for cutting back on transportation expenses. Housing, transportation, and food are often the top three expenses for most people.
However, saving money on transportation can make a big difference.
Tip: Depending on your circumstances, you might be able to work remotely, which could eliminate the requirement for two family cars. If you can, use public transportation. You may also try walking or riding to work.
Spending some time auditing subscription services you use could be worthwhile if you have multiple subscription services. Once you know exactly what is withdrawing from your account each month, then you are in a good place to make a decision that helps you achieve your savings goals.
Tip: Consider cancelling any services you don't use or those you feel you don't use enough for the maximum value for your money. Also, remove direct debits for services that you are not committed to paying for since they are not essential, as per your evaluation.
We have become accustomed to supermarkets offering cards that help you collect points. In Kenya, collecting points cut across a number of retail outlets, including petrol stations,s as well as communications and banking, where customers earn points for either shopping in or using a company’s services.
When you shop in a supermarket or fuel your car, you may accrue and redeem the points later on.
Tip: Consider getting the retailer’s card that allows you to collect points. Getting points could enable you to save money over time. While the savings may not be redeemable for cash, they can be redeemed at the retailers for any of the stuff you need which could save you some money while shopping.
If you didn't reach your personal savings target by last year's end, it can be demoralising. But don't let that depress you, though.
Many people have experienced great hardship over the past several months, and rising living expenses have made it very challenging to save money. Your best hope at this moment, regardless of what it means in your book, is probably to optimistically look ahead to 2023 and develop a strategy that enables you to make significant progress with your savings.
It is never too late and where there is a will there is a way. Always.
Successful saving this year!