Hello Nairalanders.

I am conducting a survey on “Personal Savings Culture amongst Youth”. It has been said, that most youth end up working without saving. Thank God for the compulsory Retirement Saving Plan which is usually done through PFAs.

I therefore require your input on the following: Lets assume that you earn a net monthly take home pay of N174,000.00.

1. Of this amount, what percentage do you think you can save, without touching it, consistently for two(2) years on a regular monthly basis ?
2. If your percentage savings is low, what do you think is responsible for it. Low percentage savings means 40% savings or less.

Your response will be appreciated.

Hmm.
I would say maybe 5% of that amount, realistically speaking.
Salary expense for a young person would usually consist of these three items:

1. Basic Living expenses: Food, clothing, transport, medicare, etc.
2. Commitments/Obligations, including loan repayments, religious or social obligations, dependant funding, etc.
3. Lifestyle Funding Portion, i.e, costs set aside to acquire tools commensurate with the youth's lifestyle. Could be an iPod, new mobile phone, TV, etc.

After all of that, there is usually little left to save, realistically speaking.

Ajanlekoko,
Your post just made me feel I must have been normal afterall as I've always assumed something was wrong with my planning. I however think we need to still categorize these youths further.

1.Are we looking at the youth that stays under his own roof and bears his bills alone?
2.Are we looking at the married ones?
3. Is this person equally setting aside money for certain projects say further studies, car, housing etc?

You obviously have a good experience of this stage, thus throwing it back to you.

^^
Me, or the original poster?

@ abott,

I’ll respond to your survey first. If I earn N 174,000 monthly after tax deductions as a single, my budget will typically be as follows:

Tithe: 17,400 (yeah, I don’t joke with that!)
Monthly transport allowance: 20,000 (assuming N 1,000 daily for 20 working days)
Personal care (feeding, health, clothing, utility bills): 40,000
Family obligations (parents, siblings, family fund, girl-friend, etc): 20,000 (could vary)
Miscellanous espenses: 10,000 (reasonably, could be more if extravagance permits)

From the above, you can see I’ll be left with 66, 600. If on an RSA, then I should expect 20,000 to 35,000 to be deducted from that by my PFA. So in the end, there’s just a little over 30,000 left. If I choose to save that monthly for two years, that should amount to N 720,000. Not much to brag about.

On the contrary, if I have special projects to execute (for example, I intend to go for a masters abroad), my budget will be different. Saving N 100,000 out of N 174,000 will amount to N 2,400,000 in two years. Now, that’s some bucks. This can only be achieved by working on a strict budget for two years which is very difficult but not impossible. Trust me, N 74,000 will be sufficient for one month. Some graduates earn that as monthly salary.

So, it is largely dependent on personal lifestyle and future plans. But only a few youths have a good savings culture. All, savings culture does not change with increased income.

@Ajanlekoko,

The questions were directed to you really, I was working based on the 5% you mentioned and I'ld like us to take further assumptions maybe it can make the % vary or not.
With this the poster can expand the scope of his research to cover different assumptions and 2 - Selfishly I'ld say I want to learn more

@poster if you are on a project,100k will be difficult but not impossible,you have to make some enemies doing just that,but if not on a project 40% is ideal saving plan.remember this salary you earn is not for you alone,others are also dependent on it.
happy saving.

i used to save like hell way back then when i was a fresh graduate and working for a bank. as in, out of 174k i would save 87k and continue living a happy life until my my family needs some financial aid in the form of health, education or whatever and i see my hard earned savings disappear like FIAM! until one youth copper i was dating said "man your house is not so good o, no woman will want to settle down here" until in had that wicked malaria and typhoid that almost wiped me out and i started thinking of dying. who's gonna eat the money when am gone. forget that. now i even take loans from banks in order to invest. and do you know the funny thing, i even became richer through the investments. kai i am even looking for more loan to take.

i fit borrow small money from u. i wan buy one small shop like that.

Superbrain:

@ abott,

I’ll respond to your survey first. If I earn N 174,000 monthly after tax deductions as a single, my budget will typically be as follows:

Tithe: 17,400 (yeah, I don’t joke with that!)
Monthly transport allowance: 20,000 (assuming N 1,000 daily for 20 working days)
Personal care (feeding, health, clothing, utility bills): 40,000
Family obligations (parents, siblings, family fund, girl-friend, etc): 20,000 (could vary)
Miscellanous espenses: 10,000 (reasonably, could be more if extravagance permits)

From the above, you can see I’ll be left with 66, 600. If on an RSA, then I should expect 20,000 to 35,000 to be deducted from that by my PFA. So in the end, there’s just a little over 30,000 left. If I choose to save that monthly for two years, that should amount to N 720,000. Not much to brag about.

On the contrary, if I have special projects to execute (for example, I intend to go for a masters abroad), my budget will be different. Saving N 100,000 out of N 174,000 will amount to N 2,400,000 in two years. Now, that’s some bucks. This can only be achieved by working on a strict budget for two years which is very difficult but not impossible. Trust me, N 74,000 will be sufficient for one month. Some graduates earn that as monthly salary.

So, it is largely dependent on personal lifestyle and future plans. But only a few youths have a good savings culture. All, savings culture does not change with increased income.

good response. its in order in my opinion. i no dey joke with tithe too o . sometimes (like stated above), its important to state how much you want to save monthly. Then, see if the rest can cater for your needs and work it out. Remember that its you who makes the expenditures so you can control it.

its important to save. imagine saving 10k from the day you were employed (say at 25 years) to just before you will retire (say 55years). Without interest, that amounts to 30 years x 12months X N10000 = 3.6M. A good sum for a middle-class earner. You can retire in your home. Assume that you can save 5 times that sum monthly, thats 18M before your retirement !
I have prepared an excel sheet for myself in this regards and it helps me to focus. I also do the same savings for my 9-month old son and future children in preps for their education up till their university. It makes you relaxed in your 40's to 60's.
No amount is too small. N5000 a month for example, for a baby today, will yield 360k for his primary educ at 6years. Its significant. Its when we have fewer financial responsibilities that we should save adequately.

This topic is like a breath of fresh air in this Nigerian forum; over head one guy on the 700 club talk about the 80,10,10 formula. Live on 80%, save 10% and tithe/give 10%.

40% saving is very high. Take it from me, feeding takes the highest persent of one salary follow my housing, then church/musque, school fees, transportation, giving parents and other people, clothe and saving comes last

leighcon:

@Ajanlekoko,

The questions were directed to you really, I was working based on the 5% you mentioned and I'ld like us to take further assumptions  maybe it can make the % vary or not.
With this the poster can expand the scope of his research to cover different assumptions and 2 - Selfishly I'ld say I want to learn more

Okay.
I was actually looking at the single youth, in response to your first question.
For married people, the curve will be different, as you will have less need for lifestyle, and more need for family expense funding. Kids can fall sick at short notice, you have to pay creche and school fees, maybe even finance a maid or driver, etc.
As per further studies, on 174k, it would have to be local education. Possibly professional certification or a local postgraduate degree. For foreign degrees, the cost is almost criminal. For an average UK Masters, you're looking at maybe 25k pounds, so you're going to have to save 100% of your money for 3 years to afford that.

wazobia-ng:

i used to save like hell way back then when i was a fresh graduate and working for a bank. as in, out of 174k i would save 87k and continue living a happy life until my my family needs some financial aid in the form of health, education or whatever and i see my hard earned savings disappear like FIAM! until one youth copper i was dating said "man your house is not so good o, no woman will want to settle down here" until in had that wicked malaria and typhoid that almost wiped me out and i started thinking of dying. who's gonna eat the money when am gone. forget that. now i even take loans from banks in order to invest. and do you know the funny thing, i even became richer through the investments. kai i am even looking for more loan to take.

That lifestyle in itself has inherent risks. If you don't know how to handle borrowed funds, you might be in quite a hole within a short time.

why was my post deleted?

40% is good saving plan,cause you may have to see an oppurtunity and need immediate fun to execute it,if you do not save that much,it's bye to oppurtunity.

An Ijebu-woman/man does not need a teacher on how to save his/her money.

I saved my salaries for one year without withdrawing.
Wondering how I cope! God always there for me.

@kemisuga

you must have deceiving a lot of guys and living of some other people.

@ Otokx - No, it is alot of guys dat deceived me to collect from me.

I am staying wit ma broda, so no house rent

I live from gift of monies from snr colleagues. It is a usual thing in my place of work, many lives on their commissions and not salaries.

This is Nigeria,with presssure from your family members,friends,neighbors, chikalas,e.t.c dangling on your neck every day,i bet if you can save anything , I become sad anytime my salary is due because of long que of demands.Some time,you can run away from them, u keep giving, no saving culture.Nigeria is a difficult country, except you want to be branded as WICKED AND STINGY,

youths don't save these days,money enter hand money dey go, our parents were able to save up and build their houses and also fund children's education, the spending culture of youths these days is crazy

@ ayo - Not every youth. I do save well. Even save money with me for 5years without spending it. But the money must be in mints

@Kemisugar

i'd like to know how the guys deceived you.

I used to be  a very good saver, until I was influenced by some fellas who gave the impression that money is meant to be spent.  



Since that time, there is always something to spend my money on- important or unimportant. As long as I was happy.

But  still tryin to go back to wht it was b/4,

@poster
I wish your hypothesis of a monthly income of 174,000 is close to reality. for some of us dont even earn up to half of that amount in a month.

Note that the marginal propensity to consume ,MPC, of the lower income earner is higher than that of the high income earner. In other words, those that earn low tend to spend a greater proportion of their income than those earning very high.

For instance, Mallam Dankano earns N20,000 a month. Out of this amount he spends N8,000 on feeding;N4,000 on transport, N2,000 on rent, N2,500 on extended family obligations and the rest he saves. This implies that Mallam Dankano saves only 17% of his monthly income.

Now Dr. Mini-Ikensi earns N450,000 a month. He saves N250,000 immediately. He spends N40,000 on feeding;N45,000 on rent; N30,000 on fuel and transport; the rest he spends on other miscellaneous items.

In proportionate terms, Mallam Dankano spends a greater percentage of his income in trying to survive than Dr. Mini-Ikensi.

The low income earners spend more than half of their income on feeding and survival expenses. The higher income earner usually have excess (or idle cash balances) to save or invest.

So Mr Poster, the income of the youths determine their saving or thrift culture.





no mind me, i be economist.

Up till now nobody has mentioned that important expense called rent and its impact on savings.

The amount, N174,000.00 is not even realistic for a vast majority of Nigerian youths.
a lot of factors will have to decide hw your groupings will work.

@ otokx - they pretend to love me. And asked me to lend them some monies, promising to return back. But it is all lies. None of them return before they ran away.

But am wise-up now.

I can confidently say I save about 50% to 52% of my monthly take home (not so much), even with a stay-at-home wife and a kid. . . . . I guess it's all about discipline! 

itsmayiela:

@poster
I wish your hypothesis of a monthly income of 174,000 is close to reality. for some of us dont even earn up to half of that amount in a month.

Note that the marginal propensity to consume ,MPC, of the lower income earner is higher than that of the high income earner. In other words, those that earn low tend to spend a greater proportion of their income than those earning very high.

For instance, Mallam Dankano earns N20,000 a month. Out of this amount he spends N8,000 on feeding;N4,000 on transport, N2,000 on rent, N2,500 on extended family obligations and the rest he saves. This implies that Mallam Dankano saves only 17% of his monthly income.

Now Dr. Mini-Ikensi earns N450,000 a month. He saves N250,000 immediately. He spends N40,000 on feeding;N45,000 on rent; N30,000 on fuel and transport; the rest he spends on other miscellaneous items.

In proportionate terms, Mallam Dankano spends a greater percentage of his income in trying to survive than Dr. Mini-Ikensi.

The low income earners spend more than half of their income on feeding and survival expenses. The higher income earner usually have excess (or idle cash balances) to save or invest.

So Mr Poster, the income of the youths determine their saving or thrift culture.


no mind me, i be economist.

I gbadun ur analogy joo! True talk! Higher income earners tend to save more. . .

larimo:

why was my post deleted?

Larimo, it was the spambot that tagged your post. I have pm'd Seun to untag it for you.

this is a nice one.

but you are seeing excuses indtead of how it could be achieved.

however, no matter how much you earn there are enough things to fleece it off.

you must make it a discipline to save coz if you die these people you are thinking of must survive.

mo money mo problems

as your income increases so will your expenses

you will buy

dstv
generator,
moto
internet access

just to list a few

AjanleKoko:

Okay.
I was actually looking at the single youth, in response to your first question.
For married people, the curve will be different, as you will have less need for lifestyle, and more need for family expense funding. Kids can fall sick at short notice [b](That is if there is any notification at all)[/b] , you have to pay creche and school fees, maybe even finance a maid or driver, etc.
As per further studies, on 174k, it would have to be local education. Possibly professional certification or a local postgraduate degree. For foreign degrees, the cost is almost criminal. For an average UK Masters, you're looking at maybe 25k pounds, so you're going to have to save 100% of your money for 3 years to afford that.

Thanks Ajanlekoko, in essence the 5% cannot even be constant for the married ones.


People don't let us digress from the OP's intention

abott:


I therefore require your input on the following: Lets assume that you earn a net monthly take home pay of N174,000.00.  N174k might not be common but that is what he wants to work with

1. Of this amount, what percentage do you think you can save, without touching it, consistently for two(2) years on a regular monthly basis ?
               Consistency is the keyword there
2. If your percentage savings is low, what do you think is responsible for it. Low percentage savings means 40% savings or less.

Your response will be appreciated.

OP,
For people who live in Lagos 40% may not be a low percentage. Ajanlekoko suggested 5% (N8.7k) as being realistic but I'ld say with moderate lifestyle and discipline N20k monthly (about 11.4%) is realistic.

My own experience however is that even when you decide to save that up one tends to dip hands into it to acquire some necessities. And if God has blessed you with a car - That is one wife on its own.


For people who can (in Lagos) set aside 40% and above (N69.6k +) monthly, please share your formula with us.