How To Save Money in Nigeria : 15 Saving Tips To Get Started

November 25, 2022
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Abstract

Are you looking for ways to save money? You first need to make a list of all your expenses and eliminate those that are not essential. When you choose cheaper options, you can meet any savings goals you create.

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Introduction

Learning how to save money begins with assessing your expenses. The reason is simple: when you deduct what you spend from your monthly expenses, you get your monthly savings.

Whether it is energy efficient appliances or an optimum insurance plan, you need to choose cheaper options to save money. You also need to make a few simple changes in your lifestyle, such as reducing unnecessary outings, choosing public transport, avoiding debt and so on.

Learn how to save money each month with these simple tips.

15 Simple Tips to Save Money

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Follow these 15 simple tips for saving money:

1. Create a Budget

When you don't have control over what or where you're spending money, you can't begin to save money. The starting point for creating savings goals is a monthly budget.

A budget gives you information on your cash flow which is the difference between your monthly income and expenses. Divide your costs into fixed and variable components, then find out the variable costs you can cut down on.

2. Reduce Your Debt

Debt eats into your savings, so you need to pay off your debt to save money effectively. When you're using a credit card for purchases, you're spending money that isn't yours.

Reduce your debt as much as possible and dedicate a portion of your monthly budget to pay off any remaining debt you may have.

3. Open a Designated Savings Account

A designated savings account can help you save money. Transfer the money for your savings goals the day your salary gets credited into a dedicated savings account. To avoid inflation, you can invest the same money in low-risk securities.

4. Set a Monthly No-Spend Day

Instead of changing your spending habits overnight, try doing it one step or one day at a time.

Choose one day in the month when you will save money by making a meal at home or watching content online for entertainment. When you start to spend less for one day, you can gradually increase it to two days a month and eventually a week per month.

5. Identify Non-Essential Expenses

Do you ever go to the shopping mall and overspend? If you do, it's time you make a list of items you need before you go shopping. Do you really need to buy that pair of sneakers this month or can you invest the same funds to a different financial goal? Do you need to splurge on chicken shawarma every evening or can you cut back to invest that amount once a week? 

Reconsider what you essential and non-essential expenses look like. When the time is right, you can treat yourself to the finer things in life. When you spend less, there's more room in your savings account to invest. Once your practice this as a habit, you will find more ways to explore frugality without compromising on what brings you satisfaction.

6. Try Envelope Budgeting, but online

Just as the name suggests, envelope budgeting means putting physical cash into envelopes for monthly expenses like utility bills, rent, and more. While doing it physically may not be your best bet to fight inflation, you should invest and build a fund for your needs. Eventually, you'll realise that you're earning passive income while setting money aside responsibly.

7. Try To Restrict Subscriptions

Think about it, how many subscriptions to OTT platforms do you actually get to make the most of? Are you ordering things from online e-commerce portals?

If you don't need all the subscriptions and the products you order are not essential, stop subscribing for them. You can spend less this way and stay within your budget.

8. Make Your Bonus Work For You

Are you one of those lucky people who get a hefty annual bonus or have generous relatives who gift you money? If yes, transfer that annual bonus to an investment asset that allows you to meet your financial goals, like an emergency fund.

If you have any outstanding debt, use this extra money to pay it off. You spend less of your monthly income and save more.

9. Lower Your Monthly Bills

Making some minor adjustments in your lifestyle can help you spend less. Opt for energy-efficient electronics, use cold water for washing your clothes, and fix those leaking pipes to meet your savings goal. With energy-efficient appliances, you save money on electricity bills.

You can also save on transportation costs by planning your trips to the shopping mall or other locations you frequent. Decide on a day each month for grocery shopping so your fuel costs are lower. When you have a list of essential items, your shopping bills are lower too.

10. Set Up Standing Instructions for Transfers

If you feel like traditional methods like envelope budgeting need too much effort, then go for automated transfers. Instead of taking cash out from the bank, give your bank instructions for the amount to be transferred to different funds from your savings account.

Since the funds are transferred from your savings account, with a lower balance, you have no choice but to spend less. This is a form of forced savings, and you also achieve your financial goals on time.

11. Check for Deals

Movies, sporting events, and amusement parks all have discount schemes. Check online before you buy tickets to save money. Various sites  offer event tickets at a discounted price.

12. Explore The Option Of Staycations

Going on a vacation, especially to a foreign country, can burn a hole in your pocket and disrupt your savings goals. If you don't plan well in advance for a vacation, you end up paying a much higher price than planned - quite literally! If you're looking to relax, explore staycations at one-of-a-king properties or play tourist in your own city and explore the popular spots.

13. Check Your Insurance Premiums

Whether it's car insurance or life insurance, you should visit online portals and try to get the best rate depending on your insurance needs. Choose from rates offered by different life insurance companies land find the one that suits you best.

Know your insurance cover through free online calculators or engage a personal financial advisor before you buy insurance to save money.

14. Avoid Offers by Email

Unplanned expenditures can happen due to tempting newsletter emails, sitting in your inbox. Just like buying a product you don't need offline is a threat to your savings goal, so are online offers through email marketing.

Protect yourself by unsubscribing from such mailing lists. Not only will you have less spam in your email, but you will also save money by avoiding such offers.

15. Explore Different Hobbies

You can save money by finding cheaper options for enjoying your hobbies, like using the local library and renting hard copies of books or Kindle versions instead of buying them.

If you want to learn cooking, you don't need any expensive classes; there are plenty of free YouTube tutorials that you can learn from.

In the next section, know what a monthly expense is through examples.

What Are Some Types of Monthly Expenses?

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The amount that you spend each month is your monthly expense. You're likely to overspend if you don't have a monthly budget. Your expenses can be classified into three different categories. Let's understand these categories in detail:

1. Needs

The portion of your monthly expense that you spend on essential items comprises your needs. In the 50/30/20 budget model, 50% of your post-tax income is spent on needs. Here are some examples of needs:

  • Housing. such as rent and property tax
  • Healthcare premium for insurance with additional medical expenses.
  • Life insurance premium
  • Transportation costs such as the down payment on your car, public transport charges, and fuel bills.
  • Loan repayments
  • Utilities, including cell phone bills, internet charges, electricity bills, and more

2. Wants

The expenses in your monthly budget that are not regular come under the category of wants. In the 50/30/20 model, 30% of your post-tax income is spent on wants. Here are some examples of wants:

  • Interior decoration for your home
  • Outings at cafes and restaurants
  • Membership costs for clubs and gyms
  • Travel costs like hotel charges, flight tickets, car rentals, and more
  • Charges for your entertainment subscriptions

3. Luxury Items

Items that you don't need but wish you could own come under this category. These items usually don't appear in your monthly budget. Here are some examples of luxury items:

  • Clothing sold under a well-known designer label
  • Exclusive cars and watches
  • Gold or platinum jewellery

In the 50/30/20 model, 20% is part of your savings goal. If you are looking for ways to save money, you need to start by analysing the first category of expenses and needs.

You can save money by choosing cheaper options under your needs, restricting your wants, and avoiding luxuries. By doing so, you spend less on needs and wants, and your savings go up.

In the next section, we look at the 30-day rule to save money.

What is the 30-Day Rule?

Are you an impulsive buyer? Do you go for an evening stroll and end up with bags of things you don't actually need? Then you need to try the 30-day rule to save money.

The 30-day rule does not say 'don't spend,' it just says to postpone your purchase by a month. Put your money aside in a digitally appreciating asset, and then visit the store after a month to buy the product. You spend less, and your savings goal is fulfilled since you may end up finally not buying the thing.

Here are few ways to save money using the 30-day rule:

Know the Difference Between Needs and Wants:

Define your essential and non-essential expenses when you start the 30-day rule. All your needs go into your savings plan, and your wants will come under the 30-day rule. Every time you go shopping, ask yourself whether the item is a need or want.

Let Your Money Grow

While the unspent money earns interest in your savings account, you can decide if you actually need that smartphone or pair of shoes. A high-interest savings account will help you earn higher interest.

Start an Entertainment Fund

Trying to spend less overnight is a challenge, so set aside a modest sum of money every week for an entertainment fund. When you buy inexpensive items, at least the craving for spending won't be that high.

Conclusion

Savings are the first step to achieving your financial goals in life, which lead to greater financial security. When you learn how to save money each month, you can start investing in your savings plan.

If you want to learn how to save money, you need to begin by analysing your expenses. There are 3 categories of expenses you spend on - needs, wants, and luxuries.

Follow the tips for saving money we've shared in this blog. Try the 30-day rule along with the 50/30/20 model. It's possible you may not succeed initially, but with practice, you can spend less and meet your savings goal.

Now that you know how to save money start your journey toward financial freedom today!

FAQs

What are Examples of Monthly Expenses?

The post-tax monthly income you spend on different items comprises your monthly expenses. Your monthly expenses can be classified into needs, wants, and luxuries.

Needs include the priority items that feature regularly on your monthly expense lists, like groceries, utilities, fuel costs, and insurance premiums.

Wants include items that are not part of your regular monthly expenses. They are not essential. Examples include dining out, home renovations, and air travel charges.

What's the 50-30-20 Budget Rule?

The 50-30-20 Budget Rule is a way to spend less and save money. You should spend 50% of your monthly income on your needs, 30% on your wants, and the balance 20% should be your savings goal. This is the starting point of your savings plan.

Why is Saving Money so Hard?

Saving money needs consistent effort and practice. Plus, if you haven't defined your financial goals according to the SMART (Specific, Measurable, Achievable, Realistic, and Timely) method, saving money is even harder.

Is 500 Naira a Month Good to Save?

To activate your savings plan and achieve your financial goals, it's important to start saving. So, 500 Naira is a great amount to start with.

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