Perhaps it’s because I love to hoard, that’s why I enjoy saving so much. I’m one of those people who would stay, watching something they wanted pass by, simply because I love seeing money sitting pretty in my account. This was a habit I nurtured since childhood. I’d rather save any money given to me by adults in small purses, than spend it on snacks. Thanks to this habit, I can’t count the number of times my savings have saved me at this my grown age.😂
When it comes to saving, there’s this technique I came across online and have been practicing. It’s called the 50/30/20 method. In that method, you share your income into three parts. 50% of your income, goes to your regular debit account, 30% goes to your emergency funds, and 20% goes to your long-term savings account. That 50% is what you use to satisfy your pressing needs, wants or whatever. So, according to the rule, if this 50% doesn’t cover your needs at the time, you should work towards fitting your cost of living, into that amount bracket.
To be able to save long term, you need to set aside a particular sum that you are free to use whenever there’s an emergency expense. Before I learnt this rule, i used to have just one account for all my savings. I just kept money I didn’t need at the time, in the account. So, every time an emergency expense came up, I’d just withdraw from there. However, in this method, there were certain times I overspent, I’d then be wondering how the money went down so much, and how quickly I needed to get it back up. Thanks to this rule, that’s no longer a huge problem.
I have different bank accounts for different purposes. One for my daily spending. Every amount I leave in this account, is to be spent. Then, there’s another account I use specifically for savings, for my emergency savings and long-term savings. For the long-term, I simply lock that money for an amount of time, and watch it accumulate interest. As more money comes in, I’ll simply top up the locked amount.
For the emergency, I simply leave it in the account, so it earns interest, and is also easily accessible. You never know when impromptu expenses will come up, hence, the need to be prepared for it, so you don’t end up with no savings in the end. For my savings, I use an account that yields high interest. This is important for me because since I’m not investing my long-term saving into a business, stocks or whatever at the moment, there’s the need to still gain something from it.
The key to saving effectively, is discipline. If you’re not disciplined, you’ll continuously to spend recklessly, and still have a way to justify it. There’ll always be many unnecessary things to buy, so many itches to scratch, and many cravings to satisfy. And you know what still exists aside all these things I mentioned? Expenses. There’ll also always be expenses you can’t run away from. Hence, the need for planning and prudence when spending.
This is my entry to the indiaunited prompt for the week
Thanks for reading.
First image was generated using Gemini, and second image is mine.