- Saving money consistently is challenging due to our tendency to prioritize immediate needs over future needs.
- Developing additional skills and income streams can help increase your overall earnings and make saving money easier.
- Implementing strategies such as visualizing your future financial situation, tracking expenses, setting goals, automating savings, and exploring unorthodox ways of saving can contribute to saving money from a salary.
Developing the habit of saving money consistently is one of the most difficult things to do on the planet. There are a lot of reasons why this is so.
Writing for CNN Money, a professor of Economics at Harvard University named Sendhil Mullainathan, explained that humans are more likely to prioritize their immediate needs (e.g. a new phone) over our future needs (such as retirement).
This is similar to why we procrastinate in general. According to Hal Hershfield, an assistant professor at New York University’s Stern School of Business, “On a psychological and emotional level, we consider that future self as if it’s another person.”
In essence, we see our future selves as strangers. Since the person we will become in a few months or years is unknown to us, we do not always make the best decisions for our future.
You work 9-5 every day and earn a salary, but end up broke and wonder why you have to go through the same cycle every month. Well, this happens not necessarily because you are reckless with money (although it could be), but mostly because there are just so many things to sort out.
However, there are several benefits to saving money as you can see below;
- Saving enough money can guarantee your financial freedom.
- Savings provides safety and easy access in case of any unexpected occurrence.
- Saving money will give you peace of mind, pride, and independence. The less fear you have of going broke, the more freedom you have of doing anything you want and the likelihood of increasing your happiness.
Should I save money with each paycheck?
The answer is No. Just try to make more money. That is easier than saving money. I find that whenever I try to save money, I end up spending more. I don’t know why that is. I’m a horrible spender, which is probably why I’ve gone broke so many times.
It is better to just make more money with multiple streams of income so you don’t worry about going broke. And then saving money will come naturally as you make more money.
Do not forget that a salary will never make you money. After taxes and the daily grind, and your exhaustion and the feelings of ‘I hate my job’, coupled with inflation and new expenses (kids), you will never be able to save.
I say it glibly, try to make more money. I know it is not that easy to do. But as James Altucher has stated, if you have a constant focus on alternative means of income, then you will earn more money in the long run.
I recently came across the statement above and I completely agree with it to a large extent. It is very difficult to save money from your salary anywhere in the world; more so in a country like Nigeria where many terrible economic conditions work against you.
The average Nigerian multimillionaire/billionaire has more than 5 sources of income. You can ask the tax authorities to verify this.
So, what does this have to do with saving money?
This has a lot to do with it because you have skills that are marketable even if you don’t recognise them. You are presently working at a job providing services that you get paid for which means you provide value in exchange for a salary. Imagine a scenario where you can provide those services to people out there and get paid for it on the side. That’s the dream and it is very possible.
What do I do if I have no skills?
First, you must be willing to be open to change to improve yourself because your best ideas and habits got you to your present position. Now do the three things below and tell me in six months if things do not change for the better.
- Read hundreds of books in fields you are interested in learning about.
- Listen to podcasts from people you would love to be like, and learn from their mistakes and successes.
- Take courses online – there are thousands of courses you can learn on sites like YouTube, Coursera & Udemy for as low as N3,000. Once you are done learning, start offering to do things for people for free, seek feedback from trusted people then recycle.
There are lots of people on freelance websites worldwide ready to pay you to help them do things that can be done in hours in exchange for foreign currency. Doesn’t this sound exciting?
A friend of mine who runs an entertainment business paid money to learn how to make money through Wikipedia which he has successfully used on freelancing websites and has earned more than $20,000 in less than 6 months! Some of the jobs he does take him less than 30 mins to complete.
That’s the power of ideas and skills, two things no one can take away from you. You just have to know yourself, taste and notice the things that draw your attention.
I read Steve Jobs once took a calligraphy course, which seemed meaningless at the time, but he had a vision and knew where he was going. That calligraphy course had a major effect on the design of the iPhone.
Below is a list of twenty companies that will pay you for freelance service;
- Landings. job
I don’t have the time or money to learn new skills; I just want to save on my salary.
Below are things you can start doing to ensure you save money not just from your salary but any other income that comes from your hustle;
Picture yourself being broke in old age:
I think if you are completely honest with yourself and visualize how broke and lonely you will be at the mercy of others when old, you will be forced to start thinking about saving.
Look at the old people around you complaining of years they wasted chasing things that did not matter, and how life has become unbearable because they refused to save, invest and continuously improve themselves when they were younger. You don’t want that to be you in 30 years, so start now.
Start calculating your net worth:
When I started writing down my budget and calculating my net worth I became more mindful and conscious of where my money was going and started questioning everything I spent on. I started asking myself before I spend, what is the value added?
There is something magical about writing down things, the flow between your brain, the pen and paper crystallizes and creates a force that pushes you to want to get things done.
Start by reviewing your bank statements for at least 3 months and follow where the money goes. The trend will show you where your biggest expenses are. Not doing this will be like guesswork.
Record every naira you spend.
I would always do everything possible to ensure my wealth increased so I would cut down on unnecessary expenses which helped me with my savings.
There are lots of financial apps that offer a more efficient way of monitoring your spending habits than writing down on a piece of paper, however, what is ultimately required is a high level of discipline.
Calculate how many hours of work it will take you to buy:
Most salary earners will find it difficult to do this math because they don’t understand the relationship between time and income. It is important to understand that you gave thousands of (blood, sweat, and tears) hours to earn your salary. So, it is paramount to apply that same principle when it comes to spending it.
For example, if I earn N150,000 monthly and I’m interested in buying an iPhone X for say N300,000, I would have to work for 2 months without paying any bills to be able to afford it. This will help you analyze the value of an item better and will limit spending on things you don’t need at that moment.
Before you spend a Naira, establish a goal
Establish a goal that must be achieved before spending a Naira. You can create a percentage rule for yourself; for example, say before I buy that car I must make 1/10th of the cost of that car from other sources apart from my salary.
You can also create other goals like losing a certain amount of weight or finding a life partner before splurging on a vacation.
Let me be honest, it is almost impossible to save if you don’t automate savings, which means paying yourself first. Life happens in such a way that there will always be something to pay for, so you have to ensure you are one step ahead of the vicissitudes of life by automating savings.
Open a savings account for your Investment activities:
We all have a transactional savings account, where we receive our monthly salaries, pay bills, and keep emergency money, however, most people do not have set aside a savings account for managing investment funds.
You should open another savings account for your investment purposes, where money will be set aside for investment and reinvestment purposes.
For example, if you buy a stock that pays a dividend or a bond that pays you a coupon (interest), you should request for the dividend to be credited automatically to this investment savings account. This will ensure that the returns generated can be reinvested in the financial markets, instead of spending it on things that wouldn’t generate income for you.
Other unorthodox ways of saving
- Sell N50,000 – N200,000 worth of clothing, shoes, electronics and other household clusters before paying N100,000 for the latest HD TV, watch or suit. Go on websites where you can buy or sell.
- Open a mutual fund for your unborn or newly born child to fund the child’s tuition fee before going on a vacation.
- Purchase an insurance policy before spending more than N1,000,000 on that car. When tribulations occur you realize that a car is meaningless (not saying a car isn’t important) and what saved you is the insurance cover you grudgingly bought.
- Buy an Inverter: It is cost-effective and would save you money in the long run. The inverter would power your house for 2-3 days without a power supply and would make you save money buying fuel.
I would appreciate your ideas on how to save money from a salary in the comments section.