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How to Save

He who buys what he does not need, steals from himself. – Swedish Proverb

January is the time of year when we set our goals and make plans on how to achieve these goals. One of the most popular goals is to save more. Whether for emergencies or for a particular goal. Even when saving is not an explicit goal for you, you might need money to achieve your goals and the best way to raise those funds is by saving.

So, how does one save?

Cut Expenses or Increase Income

We save our surplus. If you want to save, you have to spend less or earn more. Then save the difference.

To make this happen, you will have to review your monthly expenses to see any unnecessary spending that you need to reduce or eliminate. If you cannot cut back on any expenses, work on getting new sources of income. Then make a 2020 budget, ensuring the expenses do not exceed the income and stick to it.

[Read More: Building A “User-Friendly” Personal Budget]

Save for Emergencies. Separately.

If you had an emergency that required the equivalent of one month’s income, would you be able to cover it? Without any emergency savings, we are forced to rely on loans to meet our obligations. The problem is that this can often lead to a downward spiral into a debt cycle.

You need an emergency fund equivalent to 6 months of your monthly expenses. That allows you to weather any storm that might happen in the short term.

The key is separating your emergency fund from other savings. This way, you will not end up using money for emergencies on other things. You also need to keep the money where it will earn interest so that it doesn’t lose value to inflation. Finally, you need to keep the money where you can easily access it because emergencies don’t come with a notice.

Save for Each Goal. Separately.

You have different goals. Good. You are saving for each goal. Good. Don’t mix up those savings. You need to track the progress of each goal separately and that would be difficult if you merged the savings. You also don’t want to spend money meant for goal A on goal B.

As with all savings, ensure you keep them where they will earn interest.

Save for Future Expense

If you are projecting a major expense (for example school fees), you can save for it slowly. Future expenses cannot be classified as emergencies since you know they will happen at a particular time. Saving for such expenses ensures that when they are due, you don’t have to spend a huge chunk of your income which might leave you in need of a loan to meet other expenses.


There is no escaping emergencies. Saving is the solution to preparing for emergencies. It is a cushion for hard times which are inevitable and also a platform for achieving our goals. Luckily, saving is not out of reach.


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