Why you need to save until it hurts

How time flies! The Easter holidays are here. The first quarter of the year is gone.

When I last wrote about developing a savings culture, I received many responses from the readers of this column.

Several people wondered when is the right time to teach for example your children how to save. I know many people have piggy banks and even children bank accounts.

How well does your child understand why they own a piggy bank and for the older ones, a bank account? You need to take these lessons seriously and ensure that the culture is developed when they are young.

They need to own it too. I know of a parent, who deposited Sh50,000 to his children bank accounts as pocket money right after Form Four exams.

The children used the money very differently with one almost wiping out the account in no time.

SAVING CULTURE

The other child was very careful and seemed to take care of the money only taking small amounts, which he could explain why. These were two children of the same age.

As you teach your the young ones how save, be sure not to conflict yourself with spendthrift habits.

Be sure also not to conflict each other as parents. Remember, if your children do not learn the value of money, they are likely to demolish your estate in no time the day it will be transferred to them.

How much savings have you put away since the start of the year?

Have you been faithful to your goals? If the main reason you have not kept the promise is less cash, be sure to review your business so far and work on those things that can help you meet your half year or annual savings goals.

Don’t give in to the self excuses that will prop up when you ask yourself this question.

It is a fact that we are a society weak in raising savings. Indeed, this is one of the biggest challenges of growing wealth. Wealth is accumulated over time. As a business owner, you need to work keenly on your saving culture.

Try saving little every day or per week if monthly goals are catching you off guard. Sometimes, the larger sums of money may not be visible at hand, say in your bank account but you will be surprised by the total ins and outs when you examine your monthly bank statement.

How much should you save every month? We all make different income every month, for this reason, we all cannot save the same amount.

Treat your savings like airtime. I do not know how many people today have the discipline of not loading airtime just to have it or incase you need to communicate on your phone. You want to always be prepared to send that text or make that call.

Well, be as prepared for a rainy day by putting away some money every so often. Ensure you keep aside an amount of money every month without fail.

SAVE FOR A PURPOSE

But is the old saying that we should save 10 per cent really what we should be comfortable with?

Depending on your income and wealth goals, it may or may not be enough. A good way to know if you are saving enough is to save until it hurts.

Once you start to feel a bit tight, there is a likelihood that you are saving enough. It is safe to begin with 10 per cent and keep increasing until you feel a pinch. You will be surprised how much money was passing through your hands and was never trapped into your savings scheme.

Remember to always save with a purpose too. Otherwise, you will blow off all your first quarter savings with Easter holidays just because you feel you can afford.

This is what happens when you have no plan. An opportunistic plan will strike and wipe out your hard-earned savings mocking your very self discipline and destroying your pride in learning how to save.

You should be fully aware of your long-term plan for your savings. You will be surprised how fulfilling this is.

Your savings will grow very quickly if you diligently save every day, week or month without fail.

If you are not saving any money currently because your expenses sweep away all your income, look through each expense and establish what costs you can cut.

Always budget for your income too to avoid unplanned expenses. Happy Easter holidays and saving!