In one of my very first blog posts about a year ago, I shared a story about an ex-colleague with whom I shared the book “The Richest Man In Babylon”. One of the key lessons from the book is to save at least 10% of your income and live on 90%. This my friend returned the book after reading and said flatly that it was not possible for him to do that. He even went as far as to say, the concept couldn’t work in Nigeria because “things are hard”.

I shook my head at him at the time but I realize now, some 15 years later, that we were in two completely different situations back then. While I was single and still living rent free, he was married with 3 children. I’ve gotten older (and hopefully wiser) and I now appreciate where he was coming from. It’s not easy to save when you have commitments and obligations month in, month out that outstrip your income. Things seem to be getting tougher and many people these days are living literally, hand-to-mouth. Back in those days, you were said to be struggling if your salary ran out in the third week of the month but now, even though you may be earning more in Naira terms, you are down to your last thousands midway through week two.

No matter how difficult things are though, there really is no excuse for not saving. While many say they cannot save because they are poor, I am of the opinion that many are poor because they don’t save. Truly, if you don’t save, you are not giving yourself a chance to pull yourself out of your financial situation. Your will only continue the cycle of lack and may even fall deeper. Because you have a good moral compass, you may not resort to stealing or fraud but you will unfortunately join the millions of poor Nigerians who are praying and waiting for God to write them a cheque that will solve all their financial problems.

[b]Why Saving Is Necessary
[/b]Here is why saving is crucial if you are ever going to be rich or at least comfortable. I will clarify, oddly enough, with a question. Do you recall sometime in your past when someone introduced you to a great investment or business opportunity that you were sure would yield extraordinary returns but you couldn’t invest in it because you didn’t have the required capital? Yup, I’m sure you’ve had at least two of those. We all do.

Simply put, if you don’t save, you can’t invest. If you can’t invest, you can’t create an additional source of income and if your income does not grow as quickly as your expenses, you guessed it! You will end up in a mess.

Well, I have good news and bad news. The bad news is that God doesn’t operate a bank account in any bank and he won’t be writing you a cheque. Even if He performed a miracle and “used someone to bless you “, with at least 100 million people waiting in line in Nigeria alone, even if he performed one massive miracle every day till the end of time, he still may not get to you in your lifetime. The good news though, is that IT IS possible to save money even when there is always a lot of month left after your salary runs out. Here are 6 ways to save when you are poor.

First Eliminate Debt
This is the very first step to take even before you start putting money aside. You may be in a cycle of debt whereby you have borrowed from every friend and family member you know. In fact, when you run into an old friend out of the blue, it’s not up to one week before you are asking him or her to lend you money. You are not a bad debtor though, you always pay back on time but before the next month runs out, you have to go a-borrowing again to make it to the next pay day.

If this describes your situation, have you noticed that if you didn’t have a debt repayment, you could have managed to make it to payday? Debt is one of the enemies of savings. If debt repayments are over 30% of your income, you need to intervene quickly. Pay back and try hard to break the cycle of borrowing. Make this a priority so you can start saving towards your future.

[b]Save Your Small Notes Everyday
[/b]I don’t spend a lot of cash these days but I still do this every day. It’s an almost painless way to save and it will get you into the habit of saving. At the end of every day, when you get home and change into your comfortable clothes, check your wallet and remove all cash notes from a certain denomination downwards and keep in a jar. You decide whether it’s N200 and below or N50 and below but stick to it. Consistency is more important than fast progress.

Don’t dip into this jar whatever happens or else it will not grow. Every now and then, when you may be flush with cash, throw in a N500 or N1,000 note to move things along. At the end of every month or a couple of months, you will have a small amount you can stick in a savings account. It’s important to note that this bank account should not be one that has an ATM card that you carry around in your pocket, it’s the bank account that is not linked to any ATM card, preferable it’s not even with a traditional bank but rather an insurance company or an asset management firm.

You are not to touch this money under any circumstance. It belongs to the future you and not the present you. It’s all too tempting to also say that you are simply borrowing the money and you will pay it back. Don’t trust yourself.

[b]Save Part of Your Windfalls
[/b]We all get windfalls now and then. Large ones, small ones, massive ones. Make a commitment to save 50% of any windfall or of any money that comes to you outside of your regular income. These are the savings that will accelerate the growth of your savings. Examples of windfalls are money or assets given to you by a relative (living or late), bonuses, proceeds from selling a car, your 13th month allowance, money you find in your jacket etc. Whether it’s N5,000 or N500,000, any bulk money that comes outside of your regular income should be split in two and one half saved.

Yes, you have immediate needs, but the future you will have needs too. Try to do this!

The author of the Richest man in Babylon wrote, “Pay yourself First!” It’s not good to receive this extra income and begin to share it around to other people. It’s your money. Pay half to yourself first and share the rest.


[b]Have No Spend Days
[/b]There was a night I went out with a bunch of friends and towards the end of the night, I realised that I hadn’t spent a dime. Others had bought the rounds or drinks or food that night. I wasn’t being a cheap skate by avoiding the bills or anything, on other nights, I’d always chipped in, even more than my share of bills on occasion. The circumstances this particular night though were such that I didn’t buy or pay for anything.

There was another occasion while I was on a “stay-cation”. I spent an entire weekend at home (from Friday – Sunday). Come Monday morning when I was to resume back at work, I looked all over the house for my wallet. Not only had I not spent any money, I hadn’t even seen my wallet all weekend long. It felt like I had saved money. As the old saying goes “A penny saved is a penny earned”.

If I wanted to make that money count, I should have added it to my savings jar. This is another way to save when you are poor. Have days when you try not to spend any money at all. This may involve not leaving your house sometimes (you need the rest anyway) but if you do leave home, it’s still doable.

[b]Plan Ahead
[/b]In his book, “Multiple Streams of Income”, Robert Allen talked about the planning horizon. Effectively, what he was saying in his book was that what separates the rich from the poor is the length of time they plan ahead. When a man sends his child to school abroad and pays from his savings, without borrowing, would you say he is rich or is he rich because he planned that money into existence 10 years ago and saved towards it? Let that sink in for a minute.

A 10 year planning horizon is good financial planning but the concept can be applied in your short term money management also. What are the things you usually spend money on regularly? Have you noticed that if you buy two small bottles of water, the cost works out to be more expensive that the cost of one big bottle?

Abraham Lincoln said, “The best was to predict the future is to create it”. If you know where you are going to be at 4 p.m. today, you can predict to some degree the circumstances you will be in. For example, you may know that you might be hungry. If that is the case, you can plan to eat at home before you leave or drive past an amala joint you know, where you can eat a heavy meal for N500. On the other hand, if your planning horizon is so short that you don’t know where you are going to be at 4 p.m., you will end up there hungry and be left with no choice but to spend N1,500 at the nearest fast food eatery and not even be satisfied. A trivial example perhaps but I think makes the point.

I think we plan better when we are broke anyway. We try to stretch every Naira as far as possible. Apply that thinking all the time and not just when you are broke. Stretch your money as far as it can go and save the difference.
Save Something. Anything

Going back to my ex-colleague who said he was too poor to save. Ultimately, I think he was burying his head in the sand. He may have had grand plans but looking at his meagre resources, he would have lost hope and just said to himself “What’s the point.” What I would say to him now if that situation occurred again is, “Just save something. Anything.”

No matter how poor you are, just save what you can. Can you save N1,000 a month? Then save N1,000. Make sure you are consistent. That’s the most important thing.

[b]Enough Talk, Act Now
[/b]In the last 18 months or so, we have heard about millions of Dollars in looted funds being repatriated to Nigeria. The money was intended for selfish purposes but today, they feel like savings from 25 years ago. If you wish you could have that feeling today in your personal finances, you should have saved up something in the past. It’s not too late to save for your future though.

Whatever your circumstance, it doesn’t have to be permanent and no matter how old you think you are, you still have a lot of life ahead of you. Start to save now, don’t leave it till tomorrow, start where you are right now. You can carry on praying for your miracle but let God find you doing something and not waiting cap in hand.

Spot on Op...

You have done your part. It is now left for the readers to do theirs.

Thank you.

Nice one here...