Saving money is crucial to financial stability and security, which everyone should strive to achieve. In Nigeria, where the cost of living can be high and the economy is often volatile, saving money can be incredibly challenging. However, with more planning and effort, more Nigerians can save money and secure their financial future. This article explores some practical tips and strategies for saving money in Nigeria.
Never let your rent be more than your three months’ income.
One of the most effective ways to save money is to ensure that your rent always falls within a few months of your income, specifically, not more than three months’ worth. This means that if you make N600,000 per month, your rent should never be more than N1,800,000 per year. Keeping your rent at or below this threshold gives you flexibility and ensures you have enough leftover money each month to cover other expenses and save some for your future. Doing this can help you reach your financial goals easier, and live a fulfilling life.
Another benefit of keeping your rent within this guideline is that it can help you avoid falling into a cycle of debt. When rent is too high, it can be challenging to make ends meet and pay for other necessities, such as food, transportation, and healthcare, leading to financial stress and even debt, which can be difficult to break out of. You can avoid this trap and maintain a stable financial situation by keeping your rent affordable.
Buy in bulk, cut some costs.
Many of us grew up in Nigerian homes where our parents bought home supplies in bulk, lasting the family months and saving them the cost of buying in pieces. Maybe, at the time, we were kids who didn’t know its essence, but bulk buying is an essential tool when thinking about cutting down spending costs.
Buying in bulk is a cost-effective strategy that can help businesses and individuals take advantage of economies of scale and save money on their purchases. This strategy involves buying large quantities of a product at once, typically at a discounted price. By purchasing large quantities of a product at once, you can negotiate better prices with suppliers and reduce the overall costs of the items. The cost savings can come from various sources, including bulk discounts, volume discounts, or reduced shipping costs.
Additionally, buying in bulk can help businesses and individuals avoid purchasing products frequently, saving them time and money. However, it’s essential to remember that buying in bulk may not always be the best option. It may not be feasible for businesses or individuals with limited storage space or budget. It’s also important to consider the product’s expiration date before buying in bulk, as it may not be a good idea if the product goes bad before you can use it.
Have a giving bucket. When it’s full, close the tap.
As Nigerians will say, “It takes a village to raise a child.” In return, the child grows up and takes care of the village that nurtured them. This village includes parents, family members, and friends, and the nurture ranges from paying rent or the school fees of a relative, buying clothes, starting a business for them, and generally, catering to their financial needs. Some would call it black tax.
Having a budget for your black tax or how much you give is a great way to ensure that you give back to your community and support causes you believe in without overspending. This budget should be a set amount of money you allocate specifically for charitable donations and volunteer work.
When creating your giving budget, it is important to be realistic about how much you can afford to set aside each month. It can be tempting to give more than you can afford, but remember that you also need to take care of yourself and your financial needs.
Once your giving budget is set, it is important to stick to it. And when you reach the budget limit, you should close the tap and not overspend. This will help you stay on track with your overall financial goals and ensure that you are not only able to save but also able to continue giving back in the future.
It’s also important to remember that giving doesn’t always have to be monetary. You can give your time and skills by volunteering or mentoring, which can be equally valuable and impactful. Remember, the most important thing is to make a positive difference in the lives of others and contribute to your community while also saving.
Budget for everything, especially entertainment.
It’s important to budget for everything, including entertainment. Entertainment can be a big expense, especially in big cities like Lagos, and if you like to go out a lot. Whether going to the movies, going out to eat, or taking a weekend trip, these things can add up quickly and be a major drain on your budget.
One way to budget for entertainment is to set a monthly or weekly entertainment budget. You can base this budget on your income and other expenses, such as rent, utilities, and groceries. It’s important to stick to this budget, even if it means saying no to some fun activities or events.
Another way to budget for entertainment is to look for free or low-cost activities and events. You can attend free concerts, festivals, and other events that are open to the public. You can also check out local museums, parks, and libraries for free or low-cost activities.
When planning a trip or vacation, it’s important to budget for all expenses, including transportation, lodging, food, and entertainment. Plan and book your trip early to get the best deals. You can also look for travel deals and discounts on sites that offer them.
Budgeting for entertainment is about being mindful of how you spend and finding ways to have fun without breaking the bank. Setting a budget, looking for free or low-cost activities, and planning will allow you to enjoy all the fun and entertainment you want without breaking the bank or going into debt.
Get insurance; unforeseen events are a thief of wealth.
There’s a joke that says, “It won’t happen to me,” is Nigerians’ insurance. However, mere words are insufficient to protect anyone from car accidents, fire, theft, or any other type of loss.
Insurance provides individuals and businesses a safety net against financial loss in the case of unforeseen circumstances. Without insurance, unexpected events can cause significant financial strain and even bankruptcy. For example, a car accident can result in costly medical bills and repairs. Without a car and medical insurance, the individual would be responsible for paying for these expenses out of pocket, which could lead to financial ruin.
Hence, investing in a comprehensive insurance plan is essential to safeguard against potential financial loss and ensure peace of mind in the event of unexpected circumstances.
Buy original for longevity.
Buying original products for longevity is a smart financial decision that can save you money in the long run. When you purchase original products, you invest in products made with high-quality materials and built to last, which means that you will not have to replace the product as often, saving you money over time.
For example, purchasing an original handbag will likely last you for several years, whereas a knock-off handbag may only last you for a few months. In the long run, you will spend more money on knock-off handbags because you will have to replace them more frequently.
Another benefit of buying original products is that they often come with warranties and guarantees. If something goes wrong with the product, you can have it repaired or replaced at no extra cost, saving you money on repairs or replacements that you may have to pay for if you had purchased a knock-off product.
So, next time you shop, consider investing in original products for a more cost-effective purchase.
If you work remotely, move to a cheaper City
One of the biggest expenses in major cities is rent. However, living in a secondary city in Nigeria or anywhere in the world can be a great way to save money if you work remotely. Secondary cities in Nigeria, such as Abeokuta, Calabar, and Ibadan, offer a lower cost of living compared to the major cities like Lagos and Abuja, which means that you can save money on expenses like rent, transportation, and food.
For example, in Lagos, the average rent cost is as high as N500,000 per year. In contrast, the average cost of rent in a secondary city like Abeokuta can be as low as N200,000 annually, meaning that you can save N300,000 per year on rent alone by moving to a secondary city.
So if you work remotely and are looking to save cost, you should consider moving to a cheaper city.
There’s rice at home.
Eating outside, whether at a restaurant, fast food establishment, or just grabbing takeout, can be a significant expense. Preparing meals at home is often much cheaper and allows you to have more control over what goes into your meals and the nutritional value of your food. By cooking at home, you can buy food items in bulk, save money, and plan your meals, which can help you avoid impulse purchases at the grocery store. Eating at home can also save you money on transportation costs and other expenses associated with going out to eat.
As inflation keeps soaring and things get more challenging, it is essential to adopt these cost-saving tips and live up to them. This way, you can save and reach your financial goals faster and easier.
Remember, the more you save, the more you can invest into your future and the more money that gives you down the road. So channel some of those savings into your investment plans on Rise.