ELSIE KAMBALA
Saving money is a very essential habit. Saving goals can be short-term, medium-term, and long-term. Savings are meant for various functions, including daily needs, long term goals like retirement and life insurance and unplanned events like accidents and sickness.
Financial advisers agree that you should have at least three to six months’ equivalent of your monthly expenses in your savings account.
Furthermore, financial experts have suggested that at least 20% of your monthly income must go towards savings, 50% to basic needs like rent and mortgage and 30% must go towards wants.
The Namibia Financial Inclusion Survey 2017 showed that about 80.5% (about 1.2 million adults) of the eligible population saves, across all forms of savings.
In the current economic climate, disposable income may be limited, thus maintaining savings objectives will call for dedication and self-control. To achieve this, one must distinguish between necessities and wants. Prioritise your monthly household bills, insurance, pension, and mortgage payments.
This may be a good time to consider your monthly gym membership, takeaways, or dining out expenses. Is buying clothes and shoes every month really necessary? What about the most advanced electronic gadgets? You can save money by reducing the amount you spend on entertainment.
Maintaining an emergency fund is crucial in case of unforeseen costs like car repairs or medical expenses, house maintenance, or a loss of income. Having insufficient emergency savings could result in more debt from loans and credit cards.
Savings objectives ought to be reasonable and attainable. Establishing deadlines for the savings goals’ accomplishment is also crucial. Hence, it is important to set specific, measurable, achievable, relevant, and time-bound (SMART) saving goals.
In addition, creating a separate savings account discourages you from using your funds for other things while also generating interest. It’s also crucial to start small with your savings; you don’t need to wait to accumulate big sums of money. An African saying states, “One twig at a time, a bird builds its nest.” This proverb highlights the need for patience and consistent advancement toward reaching objectives. Much like saving money bit by bit to achieve a financial goal, each small effort contributes to the larger outcome.
If you are in debt, saving can be challenging. The standard recommendation is to pay off the smallest loan first while making the minimum payments on other bills.
Financial institutions provide a variety of debt relief options, such as debt restructuring and consolidation. Rearranging current obligations to facilitate repayment and enhance cash flow is known as debt restructuring. You can pay off your debts and lower your monthly payments with this strategy. Consolidation of debt refers to the process of consolidating several loans into one. Decide to begin saving today, and you will be well on your path to becoming financially independent.
*Elsie Kambala is Chief Operating Officer and Head of Unit Trusts, Old Mutual Investment Group, Old Mutual Namibia
