The Essental of an Effective Saving plan (and how to build one)

How do we save our money?. While we are to put our hope in our income that doesn’t mean that we shouldn’t be planning ahead for the future, Saving, investing, diversifying our holding. In fact we were told that these are all Wise things to do.

A culture is a way of thinking behavior or working that exists in a society or organization. When something is done consistently, it becomes a habit; a habit done over and over becomes a way of life ie a culture. if we look at our society, we have a spending culture as opposed to a savings culture. this is why most often a bigger salary or income means more spending even though we often delude ourselves into thinking we will invest or save more when a higher income comes along,

Some necessary questions:

  1. How would a man who cannot feed be able to save?
  2. What is the rationale for keeping even a little fraction of one’s earning for tomorrow
  3. When survival for today is not guaranteed?
  4. Does saving really appeal to men who seem fated to irredeemable poverty?

What is savings:

Saving is income not spent or deferred consumption. it also involves reducing expenditure, such as recurring cost.

There are only two things to do with money, save it or spend it. For instance, if you earn $500 per month and your expenses within the same period is $480 then you are able to save the remaining ($20) . but if your expenses are higher than your, income that means you cannot save. You are living paycheque-to-paycheue. If you get fired, has an emergency or business closes, you would have little back and be in trouble.

Importance of saving:

We save basically, because we can’t predict the future. You will need money set aside to avoid going into debt to pay for your necessities. Without money put away in savings and/ or investment, you open yourself up to other risks as well.

  1. Saving money can help you become financial secure and provide a safety net in case of an emergency.
  2. It is the doorway to wealth creation. Once you know you have money accumulating your mind will start looking out information on investment
  3. It rescues one from snares of debt.
  4. If we develop a savings culture, our children do the same and their children do the same. This culture has a positive effect on not just you but generation to come. It is an extremely important legacy you can leave. Children will do what they observe and if you have a spending culture in your family, ie, more emphasis is placed on how to spend money than that is probably what they will do and teach their children to do.
  5. Saving also is linked to increased happiness. It helps in having a good life.

Types of Saving:


There are many types of savings. But for the purpose of better comprehension, I will confine this writer up to just three types; emergency, retirement and personal. it takes money to engage in any type of savings; be it emergency, retirement, or personal savings. It is true that money don’t fall from heaven, neither does Money grow on trees. But it is also true that with savings and good investment, your money can find oneness with growth.

What is emergency savings?

Emergency savings can be defined as those funds used to set aside, money needed in the event of a personal financial dilemma, such as the loss of a job, a debilitating illness or a major expenses. The purpose of emergency savings is to improve financial security by creating a safety net of funds that can be used to meet emergency expenses. you will need money set aside for these emergencies to avoid going into debt to pay for your necessities.

Living without emergency savings is a risk too high to take in a continent like Africa where everything happens unprecedented. Do not think for once to hope on the goodness of friends and relatives should the worse present itself. Things happen, the inevitable appears; but with an emergency savings, the damage can be minimized or even checked.

What is retirement savings?

If you intend to retire someday, you will probably need savings and/ or investment to take the place of the income you will no longer get from your job. Retirement savings is the type of savings done for the sole purpose of raising funds for the Cold era of retirement

What is personal savings?

personal savings is a type of savings used by an individual for that person’s own needs. It is a relative term to differentiate them from those accounts for corporate or business use.

.Another way to save money personal like example in Nigeria is “Esusu” or Ajo”. As it is locally called. Esusu” is an information means of collecting and Saving the money through a savings club or partnership, practiced across the country. it is usually taken in turns by “throwing hand” as the partners call it contributors pay a specific amount or Money in one hand when it is collected to a person. Each month, every person in the group will collect a sum of money until the next time, when another”esusu” is thrown.

Things to know:

  1. Money will never be enough. There is never going to be enough money to save. That is what you must first accept if you want to develop the habit of saving. If you are not saving with what you have today. Chances are you will not save when you have more money.
  2. There will always be problem to solve.

Developing a savings plan

  1. Draw out clear goals: there’s no better time to spell out what your saving goals are for the month than the beginning of the month. In other words. What you intend to do with your salary is just as important as the salary itself ask yourself realistic questions. What are you saying for? Is it achievable? It is also important to put actual timelines to these targets you have set. These would serve as a source of motivation. The more realistic to Targets are, The more connected you are to it and more practical it is to achieve it. Be honest and stay true to the facts.
  2. Make a budget: budgeting is the simple exercise of reconciling your income with your expenses: create a budget and monitor it. Your budget should include everything you spend money on monthly, even money spent on airtime for your mobile device and money you set aside for charity. This is not the kind of budget that you Carry around in your head, you have to write it out in a document where you can look through it as frequently as you need to. Writer out how much your disposable income is on monthly basis and how much you intend to save. Also, writer out every single item or service that you pay for, right from salon to the restaurant and others. In other words, ensure everything is covered. At the same time, ensure that you monitor your Budget. In situations where you record expenses that were not initially included in the budget, include them in the budget under review and make plans for such reoccurrence. Regardless of what comes up, a portion of your salary needs to be saved. Spending without planning your expenses is also capable of throwing you into debt. As a matter of fact, having a budget plan and sticking to it like a religion can prevent you from borrowing because it will guide your spending and personal savings. A common mistakes people make is developing a budget because you’re budgeting money you never possessed.
  3. pay yourself first: save before you spend . List savings as a fixed item in your spending plan. Do not save what is left after spending, but spend what is left after savings. Many people are not able to save enough because they don’t have anything left after all their expenses. Their financial equation is; income – expenses = savings. A simple solution is that the equation should be changed to income – savings = expenses, you should spend what is left after you are done with your savings for the month. We know controlling expenses is easier said than done. However hard you may try, there will be some expenses that will gobble up the surplus and prevent you from saving.
  4. Start small to save big: at the beginning of your career, your income may not be very high. In many cases, there is a very small investable surplus after the all the expenses. Still this should not hold you back from saving. For a young investor, the low quantum of investment is more than made up by the long period available for the money to grow. The magic of compounding ensures that even a small sum grows into a huge amount over the long term. The investment can be scaled up as the income grows in the coming years.
  5. Make more money: saving is absolutely a great thing, but investing will bring you more money in the future. As they say “your money should work for you” if your current salary is not meeting all your needs and dreams, then aim higher. Fine a way to make more money on your current job/business. It is the amount of saving that you have will form the amount of investment you will have. You will need to seek out other investments that can earn you multiple streams of income, which does not affect your dedication to your current job/ business. You can do this through different mean. Sell your skill or service. Many people have skills and expertise that are not being fully utilized.There’s a great deal of side gigs that can be a nice source of extra income. 
  6. Know where you’re good at and turn that passion, hobby, or skill into profit! You can stream your gameplay on various platforms, sell delicious pastries online, take writing or editing gigs, translate some write-ups, or transcribe audio files, during your free time. You can add your extra income to your savings or spend on stuff you like later on.

Controlling your expenditures:

Save money

When developing a saving plan ask yourself these questions:

  1. Are there any variable expenses that you can reduce or eliminate?
  2. Is there anything you spend money on that you could eliminate and apply tax return Monday.
  1. Embrace delayed qualification or wait before you splurge: the urge to buy something you like can be overwhelming, try to always distinguish your want to buy something expensive but not essential follow the 30 days rule. Just postpone the purchase by 30 days. During that period, think hard whether you really want the item. At the end of the month, if you still want to buy it, go ahead and purchase it. However, if the item was not really essential, you will get over the urge to buy and will probably shelves the idea. The simple rule work very effectively in case of gadgets, apparel, foot Wears and accessories. There is another guideline that can help you know the difference between wants and needs. The 30 minute rule says that if you are unlikely to use an item for at least 30 minutes a day on average, you shouldn’t buy it.
  2. Look inward: check your cable subscription, airtime, data, etc
  3. Avoid using blastic money: credit and debit cards are essential because an increasing number of our financial transactions take place online. However, plastic cards can be dengerous in the hands of a reckless spender. Studies show that people tend to overspend if they use a credit card for a purchase. If they have to make the payment in cash, they feel the pinch. Since the credit card user only pay through automated transfer, the full impact of the purchase are not felt. To suppress this, leave your debit and credit cards behind when you go to the mall. Take cash instead. “Keep in mind that every craving sets you back when it comes to reaching your long-term goals”. Control yourself when using your ATM card: using your debit card makes it easier for you to spend more money than you budget for.
  4. Don’t be pressured to spend: mind who you follow. Everyone’s financial situation is different. Just because your colleague has just bought a new car or booked a flat in a fancy location does not mean you should follow suit. Peer pressure to go out and splurge. When it comes to buying certain items, do the math carefully before committing expenses
  5. Smooth out your big bills: if like me you Dread a certain month of the year because that happens to be the month certain large bills like your rent is due, reduce your anxieties by opening up a separate account for that particular expenses and setup monthly payments in form of a direct debit to ensure you are gradually saving up for the huge bin payment.
  6. Learn to sey no to people soliciting for help: As children of God Christian or Muslim our professional encourage us to help one another, even to our enemy. But we must learn to sey no sometimes in order make something good out of your own life. The truth is that so long as something is coming out from your pocket, people will always cluster around. But the moment it’s not coming, they will always survive. Learn to sometimes set NO so you don’t give all to the detriment of your own goal.
  7. Eat more homemade meals: eating homemade meals help you save more money. Dining out is one of the biggest pitfalls to savings for people. With some level of planning and discipline, you create a habit that will yield results and save you more money. Come up with a weekly plan for your meals and remember that eating well shouldn’t be limited to eating at restaurants all week long. It is okay to eat out occasionally but when it becomes a daily habit, the figures begin to build up much faster than you would have thought it possible.
  8. Where have you being shopping? Do you find yourself indulging in impulsive shopping and dwelling less on how to save money? Where you shop is just as vital as what you are buying. Consider buying used items: you would be amazed at how much you are able to save when you buy used items instead of new ones. There are several places to get these items like ebay,amazon etc.
  9. Among the most popular spending triggers we have are clearance sales or major markdowns. This is when we usually go on shopping sprees because things are 10, 25, 50, or even 75 percent off. We buy because of the fear of missing out on those discounted items—not because we need ten pairs of high-waist shorts or twenty pints of ice cream.

How much money should I save each month?

At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go towards necessities, while 30% goes towards discretionary items. This is called the 50/30/20 rule of thumb, and its popular quick and easy advise. It’s all about consistency and priority.

Do not despise your days of small beginning.

Be humble and start from where you are.

Decide on an amount and start even if your best is $1

Hindrances to save:

  1. Procrastination
  2. Lack of budget
  3. Impatience
  4. Discipline and goals


the reason you are not saying with your current meager income is because you think it is not possible. You have to first of all believe it is possible. The money to put aside will not magically appear, you have to take it out of your income or salary first, and live with what is remaining. Not to say your finances wouldn’t feel the pinch, but you will eventually adjust. It may not be easy, but it is doable. The more Cash you set aside, the easier it is to survive a financial crisis.

Can you save on your current income? The correct answer is that you want it to be. If you decide to save, then you can. There is no excuse not to save. Not having savings is a choice. If you treat savings as a bottom items, nothing will drop into it.

The key issue is, do you want to remain perpetually in financial bondage or do you want to be free? Where there is a will there is a way. It’s never too late to start saving towards achieving your life goals.

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