So you think you are a good saver only when you put aside some of your income for future use? Well, I thought so too. How about saving huge sums of money only when you feel like? That’s a lot more comfortable way to save, if you ask me. However, most savers still make some mistakes. Being a good saver requires consistency, discipline and hard work and of course there is always a way to make an improvement in the way you save by avoiding these mistakes.
1. Saving when you feel like
There is a tendency amongst most savers to want to feel like saving. Little drops of water they say, makes a mighty ocean; mightier than you think. Saving consistently even in the smallest amount is a sure way to be a good saver. No matter how much you earn, saving is a necessity rather than just a feeling. Don’t wait till you make lots of money before you save because the more you earn, the more you spend.
2. Saving what is left after spending
The usual practice good savers are used to, is saving from whatever is left after spending. However, this is not right: Spending your income on a tall list of expenses including fees, utility bills, and clothing before thinking of what to save. Warren Buffet quotes “do not save what is left after spending but spend what is left after saving”. In my best opinion, your savings bill should be a part of your expenses list or budget. Don’t try to spend your income on expenses before deciding to save. The first item on your budget must be your savings bill. In this way your savings will not be at the mercy of your expenses.
3. Savings alone is not enough-Invest!
In as much as we save towards the unforeseeable future, one thing good savers must take note of is the fact that putting money in savings alone is not enough. Robert Allen quotes “how many millionaires do you know have become wealthy by investing in savings accounts?” Saving for a rainy day is not wrong but it is also important that you make some investments in several financial instruments like shares, treasury bills and other investment products which can guarantee you higher returns on your money depending on your risk level. Saving your money in just a savings account is not enough as the interest rates earned on savings accounts are usually low. If you are just putting all your money in a savings account, you are probably just keeping your money without any great benefits. It is better to have a savings account for emergency times as well an investment account. In this way you are sure to have access to your money easily as well as enjoy the privilege of earning extra on your investments.
AUTHOR
Rita A. Yeboah holds a Bsc.in Banking and Finance from the Kwame Nkrumah University of Science and Technology. She also holds a professional certification from the Ghana Stock Exchange. Rita is enthusiastic and always ready to learn new things.
