You consider yourself mature because you pay your basic bills like rent, electricity, water, buy food and so on. However, at the middle of the month, you start wondering where all your money went. Majorities of us earn good money but we lack a simple thing that can help us become reach: a plan to save. Most of us struggle to raise 3,000 shillings to deal with an emergency. It is not surprising then that attractive or big goals such as purchasing a plot or land appear to be out of reach for us. If we struggle to raise 3000 shillings for an emergency, how can we raise 60,000 as a deposit for a plot or land?
However, it is not too let. There are simple rules we can apply to our culture of life that can allow us to sort out our financial issues and start saving:
Divide your income: use the ratio 50:30:20
Use half of your income in dealing with committed bills such as food, rent, water etc.
Use 30 percent on yourself (going out, traveling, hair expenses and so on)
Then use the remaining 20 percent for savings purposes.
In turn, this will help you keep track of where your money goes. A large part of our earnings usually goes to the 30 percent group in which we can sometimes spend about 110 percent of our entire earnings.
You do not need to restrict yourself
As young people, we spend without thinking and checking our balances. In turn, this makes our spending to be unmanageable. We just spend and forget about saving and then when the money is gone we start to wonder which direction it went. Budgeting is not the solution. Allow you to spend on yourself but use small amounts. For instance, rather than going out every weekend, go out one weekend each month. The idea is to ensure that you can sustain your spending habits.
Start with small amounts but be consistent
While saving small amounts of money over an extended period appear like a long way to go before you accumulate wealth, being active with your savings will allow you to become wealthy in future. The good thing is that you will be earning interest even if you save small amounts because the longer the money stays, the more time it must accumulate interest. For instance, if you are 25 and you can start to put 1000 each month and then after five years, you will end up more with money than a 30-year-old who begun investing the same amount of money until he/she reached 60 years old. Compounding interest is very powerful. It gets better the earlier you start saving. By the time you reach 65, you will have enough money to sustain you the rest of your life.
Do not think that you cannot reach your objectives
Take time, about one hour, and organize your goals in a notebook. Once you have everything planned, it will become easier for you. Many of us consider savings and investment as involving a lot of paperwork. For instance, you desire to purchase a 250,000 plot and this seems impossible. Many of us do not realize that such goals are reachable if we focus. Once you have your goals and timeline, it will become easier.