How 4 Simple Practices Are Helping Me Reach My Savings Goal

I have to admit in this day and age of social media, we are bombarded constantly with lifestyle images that make it really difficult to save money. There is always a new restaurant to try out or a new vacation to go on and if you do not conform to the lifestyle demands then your life just does not seem as interesting. At a certain point in life I realised that you had 2 groups of activities, spending money and saving money. I love having fun like the next person but I realised that to me, I preferred the security of having enough saved for emergencies, for my future retirement, having enough for my family to live a comfortable life and planning and budgeting ahead for large purchases and vacations. So in order to make my financial goals, I have adopted 4 practices that help me save money and at the same time have fun and don’t leave me feeling left out of great experiences.

1. Cooking at home

I love great food and eating out a few nights a week, can put a huge drain on the bank account. One way to have your cake and eat it is to prepare the same dishes at home and have the same experience for a fraction of the cost. I love to look up the recipes and include the ingredients in my grocery budget so when I cook them I do not incur any additional cost, I actually prefer it to going to the restaurant because, it is convenient, it saves money, you can customise the dishes to your liking and best of all share with your loved ones.

2. Finding Cheaper Hobbies

So I have a confession to make, like every young person I know, I used to love going out with my friends, having a few cocktails and of course you had to look nice when you went out so shopping was also a habit. If a night out consists of 4 drinks at kes 250 each and maybe something to eat for kes 1000 maybe you bought a new outfit for the night kes 2500 and transportation kes 250 and by the end of the night you have blown 5000. Let's say this happens about 3 times a month, and by the end of the year you will have spent kes 180,000 or $1800 never to see that money again. So a way to have fun while saving money, is to find other hobbies that will make life more worthwhile and keep money in your pocket, you can stay in and watch movies at home with family and maybe go out once a month, or you can have a party at home with your loved ones, by having a drink while at home. Or better yet indulge in hobbies that do not cost anything like picking up jogging and training for 5 and 10k runs, Little by little the savings will add up over time and get you to your goal.

3. Avoiding The Money Trap

Try and avoid anywhere you know you are going to be tempted to spend money. It is different for everyone, for some it's the mall, or the hot new club or bar, or the coffee shop or the bookstore. If you had not planned to spend the money that day, don’t go to a place where you are likely to spend it, avoid these places instead, and use the ‘out of sight out of mind’ principle if you do not see the stuff, you will not spend money on the stuff.

4. Reverse Savings

So in order to reach your savings goals faster you can use some tools. If you are able to consistently save money, you can use the power of compounding to get to your targets faster. Let's say your savings goal is kes 10000 or $100 a month, at the end of the year you should have 120000 or $1200 if the bank pays 5% interest then you would have 126,000, the year after that after the interest payment of 5% I would have kes 132300 if i had not saved any additional money but had I continued at the same rate, at the end of the year I would have kes 258,300 from the amount from year 1 (126000+120000+(5% of the 2 amounts)). Little by little the savings will add up, by using a compound rates calculator you can see how long it would take to reach a specific goal. For example I would like to have an emergency fund of kes 1,200,000 or $12,000 let's say, I can save 10000 a month, then in 7 years I would be just short of my goal at 1,194,745.12. Now if i know how long it will take I can reach my goal faster by looking for better interest rates, getting a side hustle to add to my savings so long as i am focused i can get to the financial goal i want without compromising on life’s joyous moments.