Most of us have probably heard the stories of people who have blown their year-end bonuses before the end of the year, leaving them desperate for extra cash by the time back-to-school January adverts start being flighted on TV.
The lesson here, which some people are yet to learn, is that making sure that you save money from your salary is the easiest way to start securing your financial future.
Saving money is one of the initial steps towards financial freedom. Not only does it encourage you to develop healthy financial habits, but it also ultimately provides you with a financial cushion.
Doing this is easy, but requires a fair amount of discipline. The temptation is real and not all people have what it takes to delay instant gratification.
Tips for effective saving:
As soon as you receive your income, pay a portion of it into a separate account. Wherever possible, set up an automatic way of paying yourself. This way you can avoid the desire to spend it all.
By paying yourself first, your goals are prioritised. You need to remain true to your plan and make sure that you steadily build towards it.
Channel extra income into your savings. That 13th cheque that you receive can be saved, as long as you pay your debts off.
Avoid lumping it all into one account. Rather open different accounts. Saving for retirement should be prioritised just as much (if not more) than emergency savings. Save for every specific plan you have.
Ensure that you don’t lock up money you will need in the short term in long-term investments. So, when you save money from your salary, have a clear plan.