BY USIERE UKO
Author and personal finance expert, USIERE UKO, continues his article on ways to develop and sustain a savings habit
In part 2 of this article, I will address some comments I received from the part 1. Most of the questions and comments I received can be grouped into two broad categories (a) how to save with low income and (b) how to invest in the capital market with low funds. I will address the first part in this article.
Before I go further, I want to clarify a very important point. The thrust of my articles is financial education, personal growth and development, and not financial advice. My approach is to teach you to become your own financial expert and know what to do at each point in time – same as teaching you how to fish rather than dispensing fish any time you are hungry. This does not mean you will not need the services of financial advisers or brokers. What it means is that you will be empowered to take informed decision without anyone bamboozling you with high sounding terms. Investing is not risky. If you know what you are doing, you can manage the risks. What is risky is your not knowing what you are doing, which is what most people are doing. They start driving first before going to driving school.
This is why a mindset upgrade is very crucial. The mind is where the battle is won and lost. As with computers, if you don’t upgrade your RAM, there are some programs you will not be able to run successfully. Your system will hang.
Your mind does not have a mind of its own; it is a yes man. It tells you what you want to hear. It goes where you want it to go. It visualises what you tell it to visualise – past, present and future. If you think something cannot be done, you mind will agree with you. It will provide you with dozens of reasons why you are correct. If you say it is possible, again, your mind will agree, and provide evidence why you are correct. That is why if you say it can’t be done or it can be done, you are right either way. It is what you say it is. You can choose what you want it to be.
How to save with low income
The reason you are not saving with your current meagre income is because you think it is not possible. You have to first of all believe it is possible. The money to put aside will not magically appear, you have to take it out of your salary or income first and live with what is remaining. It may not be easy, but it is possible. Look at your savings as your ticket to freedom. Make it your number one financial priority. The moment money comes into your hands; put aside your seed (savings) before you start consuming. Some things will have to give way for instance spend less on calls, internet, eating out, use your legs more instead of ‘okada’ etc. There are a thousand and one ways to reduce expenditure. You can think of how to make more money with what you already have.
The first thing is to decide (you and your spouse) how much you will be saving every month, and then work out how to best use what is left. It is all in the mind. The key issue is, do you want to remain perpetually in financial bondage or do you want to be free? Where there is a will, there is a way.
It is fruitless trying to argue with someone if he or she can save with their current income. It is a waste of time. While you are busy arguing that it cannot be done, someone is already doing it. That is why I love this quote by George Bernard Shaw:
“People who say it cannot be done should not interrupt those who are doing it.”
Some ‘Ogas at the top’ have received the shock of their lives when they discovered what their driver has more assets than them. It has nothing to do with income, but what you do with it.
Can you save on your current income? The correct answer is what you want it to be. If you decide to save, then you can. You can save N1,000 per month. Most of us can save at least N5,000 per month. Do not despise your days of small beginnings. Be humble and start from where you are. Decide on an amount and start, even if your best is N500. A lot of people complain that the interest is peanuts. Tolerate the peanuts for now and allow your principal to grow. You will not call it peanuts in two years.
Many banks and investment houses have target savings programmes whereby you save a certain amount every month, and you are not allowed to withdraw for a certain period of time, say 18 or 24 months. In most offices, workers come together to form informal cooperative societies called ‘osusu’ which they contribute a certain amount of money each month and they take turns to carry the full pot. Even my gateman is a member of one, made up of other guards in the neighbourhood. You can also set up a direct debit with your payroll/accounts department so that a certain amount is deducted from your salary and remitted to your fund manager before you get your credit alert. The moment your mind is fully made up to start saving, you will always find a way.
There is no excuse not to save. Not having savings is a choice, which comes from the ‘consumerism paradigm’ of spending first before saving. If you treat savings as a bottom item, nothing will drip into it. When you pay yourself first, you are forced to save and live on what is left. That means you have less money for impulse items and pleasing the people.
Spouses who won’t cooperate
Sometimes your spouse may be in the way of having a family savings culture. When it comes to the issue of husband and wife, sometimes logic no longer holds. It all comes down to communication and negotiation skills. Most women cherish financial security and would not want to do anything to jeopardise the family’s financial future. It is the duty of the husband or the prudent one to communicate clearly how present sacrifices are required to achieve future financial goals. Sometimes one partner carries on as if there is no tomorrow. Some spouses hide money from each other because of this. Some men hide their payslips from their wives while some women keep a secret emergency fund. Each couple will have to work out their issues. Things get better as the partners grow and become more mature. If both partners share a common vision, gaining alignment on tactics becomes easy when there is open non-defensive communication.
At the end of the day, we all have to decide what we really want and if we are ready to pay the full price. There is no easy road to enduring success.
For questions and comments, you can contact him at usiere@gmail.com. Follow him on twitter @usiere, 08106788187 text only
Source:PUNCH
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