By Babajide Komolafe
In the previous edition, we established that savings is more of habit than size of income. We also encouraged starting small with N1,000 per month from monthly salary of N100,000.
However, someone may wonder how to set aside N1,000 especially if all the income was being committed to one expense or the other? If you really want to save and your income is tight, the first thing or habit you must develop is to track where your money goes or what you are spending on.
For one month and on a daily basis, write down what you spend on food, transport, rent, utilities, data/airtime, entertainment, snacks, education, offering, welfare support etc.
The next step is to identify expenses on ‘essentials or needs’ and separate them from expenses on ‘non-essentials.’ Needs include food, rent, cloth, transport, school fees etc. Non essential expenses include, frequent take-outs, excessive subscriptions, costly social outings and unnecessary gadget upgrades.
The third step is eliminate expenses you can do without or reduce how much you allocate to them. Even with respect to needs, you can always find a way to spend less. For example, when the government removed fuel subsidies and even now with a litre of petrol going for over N1,300, many individuals have cut down on how often they drive in order to save on money spent on fuel. Some do this by sharing rides with colleagues while others simply cut down on social outings or visits. That is why there are fewer vehicles and less traffic these days on Lagos roads.
You can also reduce eating out or buying food and instead, cook more often. During a recent visit to the headquarters of one of the big banks, I observed some of the staff came to work with food bags. The reason of course, is because this is cheaper. These days, you need about N3,000 for a good meal on the Island. But you can reduce this cost by almost half by cooking in bulk and bringing your meal to the office.
You can also reduce how much spending on airtime and data. How? Buy a 30 day bulk data/airtime and discipline yourself with calls and data usage. By buying bulk airtime and data, you can reduce your phone expenses by more than half. I am talking from personal experience.
The point is that, if you really want to save on a tight income, you must be honest enough to sincerely identify excessive and wasteful expenses you can reduce or eliminate.