You've Got to Cultivate the Saving Habit - Here's How

If investing is the door to a secure financial future, saving is the key to that door. Without unlocking it, the door cannot open, meaning that entry will fail. Saving is at the root of investment, as it is only the earnings that are saved that can be invested. The short flowchart to financial stability can easily be expressed as earnings -> savings -> investments -> prosperity. Any individual that gets the relationship between the first three elements right, would almost be sure of arriving at the fourth. Unfortunately, many factors combine to truncate that flow for a lot of people. One major point of that breach, in many cases, is with saving. Even with relatively sizeable earnings, saving could prove one's Achilles' heel, leading to a life that falls short of its promise.

Are you able to save on target? Or, do you find yourself overwhelmed by everyday needs and commitments and consequently failing to find anything left to set aside. That challenge could be real and you won't be alone there. The reason is that the burden of livelihood continues to expand and get heavier, eating up almost all income, for many. The reality, however, is that this is not going to abate. To the contrary, make factors, including inflation, increased family size, etc, will work to accentuate the demands on your pocket. The message: if you don't structure your finances well, the future could be even more difficult for you. That is why you must deal with that challenge of building a saving habit and devising the means to shield some of your income from the claws of current spending. If this is proving difficult, here are some tips to help you:

• Make a Firm Resolve
  Nothing is going to work for you until you deeply resolve to steer your life in the right direction. Saving to invest is one strong pillar to build your future on. Make that momentous decision to begin a major savings drive that will define a new future marked with growing financial strength. And the right time to do so is now.
• Put the End in Mind
  If you strive to save for savings sake, you may not muster the impetus you need to drive it through. Mark it, saving a meaningful part of your income is never an easy proposition. You consequently need all the motivation to strive on. One major source of that motivation is the vision of what you really want to achieve with your savings. Think ahead to many years to come and set a picture of what your savings should realistically achieve, given the returns you expect from the investments. A solid portfolio of stocks, bonds and other financial assets? A house? A personal networth of a certain figure? Look, if you are going to deny yourself some pleasure to save money, there must be some really worthwhile overriding goal. Get that to stir your mind and get you working. It works.
• You Need a Plan
  Deciding seriously to save is one thing, but getting a system in place to accomplish it is quite another. You can't work successfully without a financial plan. Granted that it may not get too sophisticated (depending on the skills you have), you still need to take some time and sketch out how you intend to operate, going forward, to be able to meet the contending needs for your resources, including the savings. Simply put, you need an operating budget, along with a longer-term financial plan. Your budget will deal with your income and expenditure alignment, but the longer-tern plan will deal with more strategic issues like how to position to even earn more income. If you truly understand how these basic steps can significantly place your life on the right stretch, you will give it all the time and attention it requires.
• Set Targets
  It's important that this effort be driven by targets - milestones of accomplishment, to judge your progress. You also need to set a target of what to save, ideally increasing the ratio as you gain increased supremacy over your spending instinct. The 10% of income, recommended in George S. Clason's The Richest Man in Babylon may just be a minimum. Plan to up it over time, knowing that what really works for you is the income you succeed in putting aside. Yes, current needs have to be met, but you just need to have it at the back of your mind that the most valuable part of your earning is that which you succeed in saving and investing. That's what is going to grow and make tomorrow less traumatic.

• Pay Yourself First
  If you got the last point about your saved income being the key part, you will get this one about making it the first claim on the income. In effect, let it not be compromised. Implementing this will not be so easy, so, you've got to find ways to put it on auto-pilot. Take your retirement contribution, deducted at source, for instance. You never get to touch or use it. So, why not increase your contribution? What about a standing order transfer out of your pay (or income, if not a paid-employee), by your bank? Such deduction could go to a deposit account with withdrawal restrictions or even straight to your stockbroker or property fund. It is in your interest to compel yourself to save, so don't leave it to chance.
• Make Your Savings Work
  If you continue to save, your savings will grow, but that may be outpaced by inflation, even when in a bank interest-bearing account. This could discourage sustained action. You need to see that money deliver some impressive results. Yes, you need to balance risk and growth, but you won't really get the full excitement that your savings can engender until you invest successfully and see some enthralling outcome. Consider exploring some good investment options so that your savings will really grow. What if you lose money? That's part of life, but you can minimise that risk by investing wisely.
• Develop a Perspective
  It is on the mind, so you need the continued mental perspective to achieve the results you want. Keep conditioning your mind. Feed re-enforcing principles into your psyche. "Every kobo counts" is a financial success mentality, denouncing waste. "A kobo saved is a kobo earned" reiterates that the best part is the saved one. The expenditure today on some current luxury or not-so-important purpose has a huge opportunity cost: the true cost is the millions of Naira in potential returns it would otherwise yield, when saved and invested. Must you really own the 'latest' of every gadget? No, because before you know it, that model is overtaken. Do you have to buy on impulse, off your budget? No, that's not the way of a disciplined person, working with a financial plan. Sacrifices are a key part, so be ready to endure. In all, the knowledge that your future is assuredly greater than now will fill you with the excitement that keeps you on that path to a future financially stronger, disciplined and hopefully prosperous.

It bears repeating to say that it is never easy to save. It won't just happen, either, unless and until you take a stand to make it a major plank of your financial management. If you desire a sustainable good life, go for it the time-tested way. Saving will provide the seed money to build the fortune that will sustain you and your family.