This post will show you how to plan your savings and investments without having to break your savings prematurely.
Before I proceed I want you to know that for you to save and invest successfully, you have to change your approach and mentality.
Let us consider the following steps to planning your savings and investments:
Table of Contents
Set Your Financial Goals
This is the first step you need to take because without goals you will just be running round in circles.
Your goal must be measureable and achievable.
What I mean is that, as someone earning N20,000 a month, you cannot set a goal of saving N2million at the end of the year!
That is an unreasonable goal.
Also it must be measurable, you cannot say I want to make enough money at the end of the year – enough money is not measurable, it has to be defined.
Now let us consider the man with N20,000 earning, what he needs to do is to set a goal of having say N60,000 in his account at the end of the year.
N60,000 free money at the end is big money to a man earning N20,000 per month.
What will help you to set financial goals is a budget.
Draw up a simple annual budget as stated below:
- Estimate all incomes accruable to you during the year in question
- Estimate your expenses
- Estimate your savings from the balance of the income and expenses
From this budget, you can set your financial goals.
After the goals have been set, then you can proceed to the next phase.
READ ALSO: Tips for Keeping to Your Budget
Determine How To Achieve It
Setting your goal is half of the battle, the main issue is how to get to where you want from where you are.
This is called the action plan.
Your action plan tells you what to do to get your desired result.
Now the young man with N20,000 salary can make up his mind to always put aside N5,000 monthly.
He has to decide that no matter what he would not touch the money.
Here is a simple action plan:
- Set money aside monthly: from your budget divide the total figure by 12 months to determine how much you will be saving monthly.
- Open a special Savings Account: you can open a special savings account and ensure you do not have an ATM card to the account. Be determined not to withdraw from it.
- Open a Mutual Fund Account: you can alternatively open a mutual fund account and be saving the predetermined amount monthly. Most mutual fund allow N5,000 monthly savings while other allow N10,000 minimum savings monthly. You should know that you cannot withdraw from a mutual fund account because it is an investment account. READ ALSO: How To Invest In Mutual Funds In Nigeria
- Take an Insurance Policy with savings features: you can also alternatively put your money in an insurance savings account. Such insurance policies have savings and life insurance benefits attached to them. Also depending on the policy, your investment should stay at 1 – 2 years for you to benefit much from it. You cannot easily withdraw your money until maturity. Read about how u
- Get another job or a part time job: the more money you make the more money you can save and invest. Get a part-time or freelance job to add to your income. In a more drastic move, get another job!
Take Action
Here is another phase of achieving your goals – Action!
Your goals are as good as nothing if you do not take the needed action. Inaction leads to frustration of your goals.
As we have stated above, whatever the amount you set to save every month must be saved.
If you need to open an account or buy an insurance policy, do without delays.
Take the action!
Assess Your Progress
Periodically check your progress to see how you are doing.
Consider your actual result with your expected result.
READ ALSO: How To Invest In Treasury Bills In Nigeria
You can do monthly, quarterly, Half-yearly or yearly assessment to see how far you have gone.
If after the brutally honest assessment, you do not like the progress you have made, then double your efforts to meet up.
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