When you’re young, saving money can appear to be an impossible task. It’s easy to think of your paycheck as a way to get by month to month rather than a way to prepare for the future and save for unexpected expenses.
Putting aside a tiny bit of money each month, on the other hand, can make a big difference.
A class labeled “Finance for Young Adults” is rarely found in a high school curriculum. As a result of this tragic omission, many young people have no idea how to manage their money, seek credit, or get or stay out of debt. There are, however, a few rules that ordinary Nigerian youth might follow to optimize their savings.
Saving Rules You Should Abide To As A Nigerian Youth
Let’s look at some of the most important financial topics to understand. These financial rules are meant to assist you in living your best financial life and taking advantage of the fact that the younger you are, the more time you have to save and invest.
1. Take control of your financial situation.
If you don’t learn to manage your money yourself, others will find ways. Unfortunately, some of these persons may have terrible intentions, such as dishonest, commission-based financial advisers.
Others, such as Grandma Betty, who sincerely wants you to purchase a home even if you can only afford one by taking on a risky adjustable-rate mortgage, may have the best of intentions but have no idea what they’re doing.
Instead of depending on people for financial advice, take control of your finances by reading a few fundamental personal finance books.
Then, after you’ve gained knowledge, don’t let anyone catch you off guard—whether it’s a significant other who is systematically draining your bank account or friends who want you to go out and spend a lot of money with them every weekend.
2. Self-control is a crucial ability to master
Count yourself lucky if your guardians put you through how to save when you were younger. If not, have this fact in mind, the faster you comprehend how to delay gratification, the easier and better it will be to properly manage your finances.
Although you can buy anything on credit right away if you want it, it’s much better to be patient until you have enough cash to buy it. Is paying interest on a box of cereal or a pair of pants worth it? A credit card works similarly to a debit card in that it withdraws cash from your bank account all at once, avoiding interest from the building.
If you make all of your purchases on cards, even if as a Nigerian, you can’t pay your account off at month end, you can still pay for those items in 10 years.
Credit cards turn out to be convenient, and paying on time helps you establish a good credit score. Some even provide attractive bonuses.
Except for extreme circumstances, make sure to pay your balance in full when your bill arrives. Also, don’t bring more cards than you think you’ll be able to handle. This rule is essential for building a great credit history in Nigeria.
3. Open a savings account for unexpected expenses.
In personal finance, it’s a well-worn cliché to “pay yourself first.” It’s a great idea to ear-mark money monthly for funding emergency, regardless of how much you owe in student loans or credit card debt or how low your pay looks to be.
Having cash set aside for unexpected expenses can help you stay out of debt and have a better night’s sleep.
You’ll also have money set aside for retirement, vacations, and even a down payment on a home if you acquire the zeal to save cash and regard it as a non-negotiable expense incurred monthly.
It’s simple to put money in a standard savings account, but you won’t get anything in return. Instead, put your cash in a savings account (high-yield), a money market account, or a short-term CD to earn a higher rate of return.
If you don’t, your money will lose value due to inflation. Also, be sure that the rules of your cash savings account allow you to utilize your money quickly in emergency situations.
4. Keep track of where revenue goes
After checking out finance books, you’ll realize how crucial it is to keep your spending within your means. Adequate budgeting is an efficient way to achieve this.
For example, when you look at how much coffee intake costs over a month, you’ll find that minor, realistic modifications in your everyday expenses have just as crucial an effect on your financial status as a raise.
Additionally, reducing your monthly expenses heavily will save you a significant amount of cash in a long-term basis. Even if you can now afford a fully furnished apartment, having all the whistles and bells, going for something basic may allow for the purchase of a house or condominium a lot sooner than you otherwise might.
Understanding how money works is a major step toward making it work out successfully for you.
5. Start putting money down for your retirement.
You must plan for retirement, just as your guardians or parents indeed sent you to school with high hopes of grooming you for a high level of success in a world that looked crooked as you were growing. However, interest works in such a way that the earlier you start stacking up funds and saving, the less principle you’ll need to venture into investment to accomplish your retirement goal.
To become an expert in financial management in Nigeria, keep in mind that you don’t need a fancy degree or a lot of experience.
Instead, you can be as financially successful as someone who has a hard-earned MBA in finance if you follow these rules and guidelines in your daily life.