Sometimes it is a mystery to some people and even to me that the best advice to give to someone who mismanages his or her money is to tell the person to start saving.
Mismanagement of money obviously means that the person spends more than he or she earns, yet we tell the person to save even from that income.
It works. Meet that person in a year or two (that is if the habit of saving is sustained) you will not recognize him again.
Savings is a powerful tool that helps you grow financially.
You should make it a priority to start saving early. It is one of the best ways to take control of your finances especially in this time of economic hardship.
Here are the reasons why you should save.
1. It helps you take advantage of opportunities
Saving money allowed you to build up a bulk of the money that will enable you to take advantage of opportunities that may suddenly present itself. Take for instance
Take for instance, a big company wants to move into your community. They want to build a major factory that will employ 3000 workers.
As a result, the company has an agreement with the government to build a massive road that will open your community up. There will be massive housing projects to house the workers and the company’s suppliers. There will be power installations to light up your community.
Your community is about to be transformed and it presents a huge opportunity to invest.
This kind of opportunities presents itself to us once in a while.
If you have no savings, how would you partake in such a massive investment opportunity?
There are so many other opportunities in Nigeria, primarily because we are a developing country. It takes two things to take advantage of them – 1. Knowledge of the opportunity and 2. Money to invest.
But unfortunately, so many people have not been able to take on them because they have no savings even when they know of the opportunity.
What good does it do to be well versed in investment opportunities when one has little or no money to invest?
2. It provides a safety net
Having a safety net have a huge psychological and physical effect.
It means that there is something to fall back to no matter what happens. Do you realize the ugly feeling you have when you have nothing to fall back to?
You worry yourself sick that something might go wrong.
It has a devastating effect on the way you live and behave. It affects your mind negatively.
But on the other hand, if you have a safety net, it gives you a positive outlook.
Though you might be scared that things might happen, you are not worried about it because whatever happens, there is something to fall back to.
3. It protects you during the time of uncertainties
This is when your safety net comes to your aid.
When things happen to you, your savings will help you pull through. I know that sometimes it’s not good to think negatively that things might happen to you.
I wish it works that way that if you think positively, positive things will happen to you.
It doesn’t work that way. Things will continue to happen; people will continue to lose their jobs, people will continue to experience business failures, people will continue to have accidents.
If we saved, there will be back up to cushion the effects of the mishaps that happen to us.
4. Savings are also Investments
Your savings on its own is an investment.
Unless you save your money under your bed, or in your packing store or your savings is toiling away under a six-foot hole in your backyard.
Apart from these, your savings yield interest for you. It can be two percent, five percent, or more depending on where and how you save your money.
5. It gives you knowledge
If you want to learn about money, save your money. The beginning of savings is the beginning of wisdom in the financial world.
Why is this so? Because once you have a reasonable sum of money, it is natural to start looking for how to invest that money. That is when you start meeting with financial experts, reading books, watching videos, taking courses online, and listening to finance audios. That way, you are picking up valuable financial education.
If we all saved, there is every likelihood that we will be seeking that knowledge on our own and most teachers of personal finance will have no work, because there will be nothing to teach, saving our money means that we are good money managers.
The problem people have with controlling their expenses would not be an issue because you already have your expenses under control.
6. You Can Retire Early
Savings can help you retire early and spend more quality time with your loved ones. If you start early to save and do the needful with your savings (which is investing them) you must have accumulated enough wealth in time to retire early.