How To Save

Saving is something that a lot of people find really hard to do but we all know how important it is to save.

We need some savings to fund those unforeseen circumstances in life like retrenchment from work, accidents or illness or to fund our dream trip, wedding, car and the like.

Most people upon receiving their paychecks already have a mental budget on how they are going to allocate their money; with food getting the biggest chunk of our salary.

A lot of people can't save because their mentality is " I'm going to save, what's left from all my expenses." More often, there's nothing left to save because all is used up for all our various expenses for clothings, tuition fees, shelter and for the non-essentials like watching movies or dining in expensive restaurants or getting the latest cellphone model.

This is people's equation for saving:

income less expense = savings

We must treat our savings as an expense. We have to think of it as part of our budget.

In my case, I allot ten percent of my income for my savings. When it's payday, I just allow the ten percent to be left in my payroll atm and then the ninety percent I withdraw to fund my expenses.

My equation for saving is:

income less savings = expenses

Whatever is left from my salary after I deducted my savings is what I used to buy the essential and non-essential things.

It would be better if you have an account seperate from your payroll atm. Savings should have a seperate account. And once you have establish a separate savings account, make sure you don't carry your savings atm in your wallet so as not to tempt you to buy things in an impulse.

And yes, I do have a separate atm for savings. I withdraw the ten percent of my payroll atm and then transfer it to my savings atm.

My savings in the bank is allocated for my emergency fund. They say that your emergency fund should be equivalent to six months to a year of what you earn. Since, I started late with my savings, I'm still way behind my emergency fund.

And once, I've established my emergency fund I'm going to stop savings and put my alloted savings in my wealth fund and in my retirement fund.