Saving - Building the Habit

By Ogunbiyi Abel

No One Becomes Wealth Without A Saving Habit

"A penny saved is a penny earned" Benjamin Franklin, American State man/inventor 1706-1790.

I grew up with linking children's saving in the home with the local piggy bank known in Yoruba language (a tribe in Nigeria, West Africa) as "Kolo". Today, it had gone to extreme because of our currency and economy. When must learn and cultivate the habit of saving for our children's education and other future obligations. They also need to be taught. What you don't have known nor do, you can't teach.

Saving is the best way to put your money to work for you. When you save, your money grows - doubling, tripling, quadrupling and so on it is a way to earn money without lifting a finger. And if you run into an unexpected windfall such as your profit share, housing, upfront and all those allowances that the working class gets out a portion of that into your financial objectives children's education. You will quickly see how small sums can add up to big Naira. And how getting the habit of saving will put you on the road to becoming a millionaire. The best way to reach financial goals is through "saving".

A second rule is the amount saved is less important than getting in the saving habit. I once told a friend in 1996 to buy a share of a firm, but decline saying "how can I buy at low as $15 it is too small and when I have money I will buy higher quantity and outstanding stocks" today the other person who bought them enjoys better than him. He is yet to buy a single unit in the company.

Remind yourselves that small amounts add up. The humble small beginning of little consistent drop makes a large pool of financial ocean resources.

· Pay yourself first, small amounts add up.

· If you save $0.33 daily $106.46 in a year

· Save to reach goals

Save at least between 5-25% of your overall income. From each pay cheque or income, save first; spend second.

i. Choose a convenient saving plan either with a bank or portfolio manager

ii. Start off easy: for business persons, you can use the local daily monthly and yearly contribution "Esusu or Ajo "with fellow business neighbor, workers, friends, church member, peer group etc. However make sure that they are people who won't take off with the money once they collect it.

iii. Let your saving had time frame for increasement in % paid

iv. Stick to your plan

v. Add to your saving each time you are paid and don't let minor setbacks keep you from your schedule for meeting your financial goals. If you have a minor emergency, you may need to modify you savings plan temporarily or use and emergency funds that is already established, but resume your savings habit as quickly as possible.

Use your savings and investment to pay for the goals you've set don't grow so enamored of your bank statements that you are reluctant to spend for the goals you established.

Let us not forget that wealth is a way of thinking and not a naira amount in the bank. Forbes magazine defines a rich person as one having $1 million in income and $10 million is net worth.

Savings is a vital discipline that leads to wealth. No one becomes wealth without a saving habit. Steady plodding brings prosperity, hasty speculation brings poverty. Savings is paying yourself first set apart a part of your income on regular basis. Savings early make the first million to be easy there is a large difference between a man who starts saving at age 20 versus age 30 one of the amazing wonders of the world is compound interest $20 invested daily over 10 years at 20% interest will produce $240,000 over 20 years will yield $2 million over 30 years will yield N$million, 41 years later will yield $15 million if we will save $20 daily for a child till age 54 at 20% compound interest he will meet $1 Billion in his account.

Savings should be a way of building excess cash for investment in other more profitable higher yielding portfolio. It is not to be kept idle in the savings account otherwise it get corroded by inflation.

In the financial world, leverage means the use of borrowed assets to magnify a person’s small effort into a large result.

It is the asset you borrowed to increase your effectiveness and operational base leverage is a two edge word if you are careful if can make you a lot of money. If we are not careful it can cut you the other way.

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