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Money Saving Tips: Start Saving Beyond The Rainy Day by oluwafemi1993: 3:23am On Nov 29, 2015 |
One of the most common pieces of financial
advice is the oft repeated expression, “saving
for the rainy day”. The origins of this idiom can
be traced back to the 16th century making it
more than five hundred years old, yet it shows
no signs of losing relevance in financial lexicon.
In simple terms, saving for the rainy day refers
to the wise practice of keeping something aside
for emergencies, unforeseen circumstances that
could occur in the future. This admonition
presupposes that the future is fraught with good
and bad times, fat and lean seasons. In order not
to be caught off guard, one needs these savings
to be put to use in tough times.
In other words, one should not spend all that one
makes especially in times of plenty.
Nowadays most financial analysts refer to these
savings as the “emergency fund,” a pool of funds
stored in a separate account, comprising of no
less than six months of living expenses that is
kept aside for unforeseen circumstances.
Examples of emergencies could be sickness or
disability, job loss, death of a loved one etc. It is
expected that these will come in handy to help
one cope with the financial pressure associated
with these periods.
I strongly urge you to start taking steps to create
an emergency fund for yourself right away. Take
out a portion of your income on a monthly and
regular basis and keep it away for emergencies.
This should amount to 10% of your monthly
inflows. Keep it in a high-yield savings account
and only draw the money in case of an
emergency. Once the situation has passed,
ensure to put plans in motion to replenish your
emergency fund.
There are so many other things that are outside
the realm of emergencies that you will need the
money for in the future. These needs or wants
may require substantial sums which you will
also have to plan and save towards. For example
if you want to build a house, or take advantage of
a promising business opportunity, funds are
required. Since this expenditure is not based on
tough situations you also required keeping aside
another pool of funds.
You need money to make money. Money must
be put to work hard for you in order to produce
more money. Just like the farmer does not eat
all his harvest with a view to keeping part of it for
the next planting season, so does the individual
who desires wealth. Some money seeds are kept
aside, apart from those meant for emergencies,
and for meeting current needs and expenses.
These money seeds are then planted in the soil
of money-making activities to produce wealth.
It is thus a very wise strategy for another 10 to
20% of one’s regular income to be kept aside for
this purpose in another savings account. This
leaves around 70% for the individual to live on. I
know from personal experience that doing this
can be quite challenging, but what is the
alternative? Spending all that one makes is a
recipe for everlasting poverty and penury in
these times. Becoming rich takes discipline, the
type that comes from undertaking this and other
efforts to rescue oneself from the rat race.
Saving against emergencies and saving for
future investment opportunities are just two of
the reasons why we all need to save. This is why
it goes beyond saving for the rainy day. In fact, a
more appropriate statement might be “to save
for rainy and sunny days”. The former signifies
tough times while the latter signifies good times,
when you can use the monies saved to create
further good times.
Many of us miss the mark by erroneously
believing that money is meant to be spent. The
pressure to acquire all the finer things in life and
live large is the main driver for many people.
This makes people do anything to keep spending
and spending even to the point of borrowing to
finance their lifestyles. Money rather is meant to
be multiplied instead. It is a tool meant to be put
to work by you to produce more wealth.
The importance of having savings for wealth-
building cannot be over-emphasized, as funds
saved are the raw material to be used in creating
further wealth. How can you leverage on
opportunity without funding? Most of the financial
successes we see today started small, using
their savings, building trust and credibility,
growing incomes before being entrusted with
other people’s money and going on to build great
fortune. Great wealth starts on the altar of small
beginnings.
Imbibing and cultivating a savings culture is as
simple as contacting your banker today and
placing a standing order that a certain
percentage of your earnings are transferred to
another account which you would do well to
restrict access to. It makes good economic
sense to open two accounts – one for each
savings purpose, while you do all you can to live
on the rest Don’t get too comfortable with your current earnings. Strive to increase earnings so that you will have more to save. Remember that money spent on emergencies and living expenses once gone can never be put to use again, while money invested can keep yielding more and more if the investment is done wisely. Start today to build your wealth from the ground up by saving for both rainy and sunny days! 3 Likes |
Re: Money Saving Tips: Start Saving Beyond The Rainy Day by Kezzy24(f): 4:42pm On Dec 04, 2015 |
Thank you very much for this great piece of advice! |
Re: Money Saving Tips: Start Saving Beyond The Rainy Day by IRIENBOY(m): 6:52pm On Dec 04, 2015 |
This is good. |
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