Ignoring saving is a risk you cannot afford to take. Saving has been man’s way of securing the future and catering to short-term expenses such as hospital bills, fines, and school fees. Without savings, you may end up in debt leading to depression and a difficult life for you and your family.
As soon as you get employed or start earning revenue from whatever gig you have, you need to develop a saving strategy that you’ll adhere to for the next 40 years; a simple calculation. Assuming you graduate from college at 24 years, you will work for about 40 years and then retire. If you save wisely, you secure your old days and probably won’t strain as much as your ignorant friends.
So in regards to getting a surplus for saving, here is what you can do:
a) Leave within your means
If you earn a net salary of KES40,000 per month, spending the entire figure will be detrimental to you. Worse still, spending KES50,000 per month will mean that by the end of the year, you’ll have accumulated KES120,000 in debt. Such reckless spending will lower your credit score (any score below 300) and damage your credit report.
On the other hand, spending KES30,000 per month will allow you to save KES10,000. Placing this surplus in a savings account will yield a 3% net yearly profit. Choosing better investments like bonds and stocks may increase profits by up to an average of 8%.
b) Search for the best values
According to Eric Tyson’s ‘Personal Finance in your 20s and 30s’, saying that “you get what you pay” is an excuse for lazy shoppers who don’t want to spend their time looking for high-quality buy affordable products.
The truth about many expensive products is that what you are paying for is actually because of branding. Companies spend a lot of money on marketing and branding, attracting customers. These customers end up spending more than they should. Many alternative products offer the same utility at a lower price.
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c) Don’t assume brand names are best.
Branding tends to give people the illusion that the products marketed are the best in that category. Be suspicious of companies that put their money into marketing only to deliver substandard products.
Most of the time, the ingredients between a product and its alternative are the same, but the pricing is different. Choosing to buy the cheaper alternative saves you money.
d) Get your refunds
Have you ever bought a product that did not satisfy you? Was the product damaged before you bought it? How did you feel, and what did you do about it?
Many companies that put their customers’ needs first offer warranties on their products. However, other unscrupulous companies provide substandard products. It is up to you to seek refunds from retailers that sold them to you, thus preventing double-spending.
e) Trim your spending fat
Young people tend to spend on irrelevant products that they mistake as essential, like the purchase of headphones by young adults.
Spending may also be a result of habit instead of necessity. Now the difference between the two and cut down on habitual spending to save your money.
f) Turn back on consumer credit (credit card debt or auto-loan)
Abstain from borrowing money to spend on products that depreciate over time. Products that don’t yield returns include the following:
- Personal car
- Fancy shoes
Buy what you can afford, and leave the rest to your financially stable years in the future.