Why do we save? Some people save to buy cars or houses, others save to go on vacations, or pay their children’s school or university tuition. Some save for long term plans; retirement, securing their families futures, or for emergencies and unforeseen events.
Some earn extra income from their savings; through investing them into deposits or funds that offer them a higher interest rate than regular savings accounts.
One thing is for sure, saving is an important skill to have from the moment we start earning money. Some of us are better at saving than others; some save by nature and know how to put some of their earnings aside.
For those who aren’t so lucky, saving isn’t just that easy, so here are some helpful tips to help you save better and reach your goals:
1- Save first:
Specify a percentage from your salary that you will set aside with each paycheck and budget your month’s expenses after you deduct this amount. Setting aside a specific amount will ensure that the money you try to save remains untouched throughout the month.
A helpful trick is to automate the process through a service called direct debit. Leave instructions at the bank to transfer a specific amount on a certain date from your current account to your savings account, so you don’t forget to manually do it or get the urge to spend it.
2- Make financial goals:
Saving becomes easier when you have a specific goal you are saving for, or a certain amount you want to reach. This will make saving more tangible and as a result easier.
You don’t have to save to spend; you can save to be able to save more. For example, you can put money aside in your savings account then transfer them to a time deposit which offers a higher interest rate. If you have extra cash you won’t need for a period of time or worried it might get wasted in small expenses, so you can use it to book a certificate of deposit or other long-term investment tools.
3- Consider the time value of each purchase:
Money can seem abstract sometimes, but working hours are real. Calculate your hourly rate and gauge everything based on it. For example, if your hourly rate is EGP 200, and you want to buy an item for EGP 1000. The cost might not feel like much, but consider this: is it really worth five hours of work?
4- Put quality before price:
You might think that buying cheaper items will help you save money, but it’s quite the contrary. Cheap clothes or shoes wear out faster and need replacing more often. The same goes for cheaper appliances; they end up costing you more to repair and paying high utility bills.
Try investing in expensive staple clothing items; a good coat, a sturdy pair of jeans, a tailored suit, leather shoes, etc... You may find them expensive at first but on the long run, you will find that you spent less than you would have with cheaper alternatives.
You can also invest in modern, power saving lighting bulbs and home appliances. Make a plan to change all the light bulbs in your home to power saving ones and to replace your home electronics with modern ones that have power saving options and notice the substantial difference in your utility bills.
5- Don’t get fooled by offers:
Shops will try to sell in any way they can, that’s their job. However, it’s your job to not fall for everything they try to push. Before you make any purchase ask yourself; do I actually need this or am I buying it because it’s on sale?
Prepare a list whenever you go shopping and don’t deviate from it no matter how attractive the offer might seem. If an offer peaks your interest, don’t buy it on impulse, make a mental note and think it over for a day or two. If after a couple of days you feel you still want to buy it, go back to the store and purchase it.
6- Drop the small expenses:
Some items seem inexpensive for a one time buy, but the price accumulates when bought daily. For example, your daily morning coffees and lunches at work.
Your EGP 30 daily morning coffee might not seem like much, but the repetition of that purchase ends up costing you EGP 750 per month for something that would cost much less if you make it yourself at home.
7- Budgeting and tracking:
Create a budget for your monthly spending and make sure you stick to it. Allocate specific amounts to your monthly needs and only spend what’s in your plan.
Track your spending and if you see an item that is unnecessarily high, put a plan to lower it.
8- Bonus tip: Travel on a budget
Traveling doesn’t have to break the bank! Check out our article on travelling and learn the best ways to travel on a budget and cut unnecessary expenses to save your money.
There is no one size fits all for saving, finding the method that works best for you is a trial and error process that constantly changes as you grow older and your needs and expenses change.
These are some of the most common and successful methods, if you have other tips, share them with us and we might feature them in another article.
Much of the information in this article is transcribed from other sources. CIB does not make any warranties about the reliability or accuracy of this information. Any action you take upon the information in this article is strictly at your own risk, and CIB will not be liable for any losses in connection with it.