Cultivating a savings habit

Almost everyone knows they ought to save, but cultivating the habit of saving consistently has been a major challenge, the killer of many a New Year Resolution. Many hold back from starting due to the fact that they cannot figure out how to save with what they consider a meager income. Some actually start saving but somewhere along the line, a need comes up and they ‘un-save’. They take back that which was being kept aside as savings. Some save for the rainy day, and the ‘rain’ keeps on coming such that at the end of the day, there is nothing actually saved.

Knowing what you ought to do is one thing. Finding out how and developing the capacity to do it on a sustainable basis is a different ball game entirely. Finding information is a good place to start. Learning, growing and changing the way you think puts you in a position to do the right thing in a sustainable manner to get the right results. If you are overweight, you did not pile up that weight in a few weeks. It took months and years to get there. If you want to leave that place permanently, you have to change the way you think about food, the way you interact with it and start doing the right thing over time, before you can see sustainable results, not the yoyo variety. Crash diets well, crash. The same thing works with money. You need to work yourself out of where you got yourself into.

Moving from a consumer (eater/spender) to a producer (sower/investor) requires a paradigm shift. It requires you to change the way you see money. To most people, money is money. There is no distinction. They lump everything together and deal with it mercilessly. They don’t differentiate between seed/capital and harvest/profit. This is the reason many people do not save. They cannot break their salary into its component parts – seed for planting and bread for eating.

To them, it is all bread. What they look for is more bread from where it came from, rather than putting more seed to work for the miracle of harvest. The moment they start to see the seed, their focus will shift from eating to planting, giving it time through delayed gratification so that successive planting will yield enough harvest to meet their needs and that others they desire to assist. The problem with bread is that once consumed, it is gone for good while seeds multiply perpetually. That is why what you see is critical. If you keep seeing bread, your attempt to save is doomed to failure.

How do you save when there are so many competing demands for your income, over and above what you make? How can you save when there are cries for help from many quarters? How can you save when your sister is wedding next month, your husband is celebrating his 40th birthday next month or your uncle is to be buried in two months?

Saving with a purpose.

Your saving must have a goal or purpose. You need to get a clear order or priority, a clear financial goal, and a plan to execute it. If you are saving to start a business, you need to determine how important that business is to you in your overall scheme of things. If you are saving towards building an emergency fund, you have to determine how important that is.

We like to please people and are often swayed by emotions. Pleasing people takes priority over building a solid financial foundation. Innocent children are being turned back from school because their parents could not decide what is more important – a Christmas vacation or school fees. A lot of people get goods and services on credit – shoes, jewelry, clothes, cosmetics, makeup, you name it. They owe everyone they do business with. Such people cannot sustain a savings habit, because their affluent image demands they keep spending to keep up with the Joneses. What is the purpose of holding an event if you truly cannot afford it? Why impress the public when you are crying financially within?

A lot of the cries for help we get are from people who cannot get their priorities together, folks biting more than they can chew, and borrowing money they cannot pay back. Most ‘help’ we render ends up disempowering the recipients while weakening your financial base. It is a lose-lose scenario. We cannot say no because we do not want to offend people. Until you decide what is important and have a clear order of priority and the purpose for your saving, you will be whipped around by every wind of emotion, keep saving and un-saving and riding a financial treadmill heading nowhere.

Get your savings out of reach.

After saving first before spending (taking your seed out first), the next thing is to invest the money – take it out of sight. If you have no clue what to invest in, start from the money market which has virtually zero risk. Take the money out. Don’t consider your savings as part of your salary, so that you will not be tempted to spend it. Consider your net income as your gross fewer taxes, giving, and saving. Live with what is left. If you must please people, please them within the context of what is left. If they are not pleased, too bad for them. It is better to displease them today while you are building your financial foundation and please them tomorrow when you are solid financially rather than start what you may not be able to sustain when your job is no longer there.

With your savings and investment safely out of reach of your long-spending arms, all you need to do is keep repeating the process every month, keep compounding your principal and interest, and keep compound interest working in your favor. In the beginning, it will be very slow and the proceeds may look like peanuts. If you do not despise your days of small beginnings, you will be amazed when it starts picking up speed to the point that the monthly interest or returns outpace your monthly additions.

Decide what you really want

A lot of people have a very difficult time deciding what it is they really want. They hardly stop to really think it through. Thinking is hard work, hence very few engage in that sport. Silence and solitude scare a lot of people. They cannot stand the thought of spending time with themselves. They get bored with themselves. They need other people to keep them entertained or tell them what to do.

This year, make the quality decision to break away from the pack and be yourself. If you spot two birds flying in formation, be rest assured they are not eagles. Eagles don’t flock. Each eagle charts his or her own path in the clear blue sky, riding on storms to greater heights while other birds scamper for cover.

Know who you are, where you are going, and what you really want. Be yourself. Decide what your values and priorities are and stick to them. When you gain clarity, the focus becomes easy because you have one focal point. You become dead to public opinion. Saving no longer becomes a struggle because you are saving for a purpose, as you achieve each goal on the road to your dreams.