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Anita Sie

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Member Since: Jan, 2008

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How to manage an effective savings plan
By Anita Sie   
Rated "G" by the Author.
Last edited: Thursday, April 10, 2008
Posted: Wednesday, February 20, 2008

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Most people know adapting a savings plan is easier said than done. However if the plan is broken down to simple steps anyone can make it happen...

1. Pay yourself first 10% of income is recommended to be set aside in a savings account and later invested after thorough research has been done to find out the viability of the investment options. It is advised that this amount be set aside BEFORE other expenses are paid for. Starting a savings plan with any amount is better than none at all.  For Christians there is 10% for tithe that is expected to come out of earnings before other expenses... this could be true of other religions as well

2. Emergency Fund Putting away money worth 3 to 6 months of the monthly gross salary into an emergency fund is recommended for any savings plan. This will take care of unexpected emergencies such as large medical expenses or the loss of income due to unemployment and help maintain the current financial position.

3. Create a budget Creating a budget and sticking to the budget helps keep in line with priorities and helps avoid shopping surprises.

4. Discipline The key to making the budget work is discipline. Developing a specific routine of how to spend money with specific guidelines based on the budget can help maintain the discipline needed.

5. Make sacrifices Eliminating or reducing some expenses may help release some cash. Purchases of expensive jewelry, clothes and shoes can be reduced or kept to a minimum. For example, try taking food to work from home instead of buying lunch daily. Eating home cooked meals rather than eating out or buying take out daily helps reduce the expense side of the budget.

6. Identify necessities Avoid budgeting for and purchasing items that can be done without. For example, sodas can be substituted with regular purified tap water as a healthy and less expensive alternative.

7. List items for shopping Create a list of items needed to go shopping and try as much as possible to stick to it. Establish a regular shopping routine to avoid unplanned and expensive shopping sprees.

8. Bargain One of the key tips to successful bargaining is to state your original price lower than what you are able to pay so that when you finally reach a deal, it will be within your price.

9. (Not) keeping up with the Joneses This can be accomplished by focusing on personal financial goals to eliminate unexpected expenditures. Having financial goals helps give a bigger picture of the future and therefore eliminates the need to do as others are doing which is likely to go against ones financial goals.

10. Pay raise  This could boost up savings if the additional income received is put away immediately into a separate savings account to avoid spending it. In order to enjoy the salary raise, use it to fund a financial goal that was still pending by saving the increased amount on a monthly basis.

11. Additional income Generation of extra income through hobbies and other business projects can add up a significant amount of income. Take time to research available and affordable options.

12. Save coins and smaller notes A routine of spending large notes or bills only can help ensure that every coin or small note stays in the wallet/purse until moved into a designated place for savings. This could be a regular container or a special piggy bank and then when it is full it can be taken to the bank and get deposited into a savings account so that it can continue to accumulate.

13. Plan ahead Planning to save for specific financial goals will help reduce significant shifts in the savings pattern when there is a major purchase in the future and therefore reduce the need for a large sum of money to come from the budget to finance the major purchase.

14. Multiple accounts Maintaining multiple savings or fixed deposit accounts can help match these accounts with specific financial goals to facilitate the accomplishment of goals when funds are used for the designated purpose.

15. Share with others  Giving/donating to others is as important as spending it on your self. The difference however is the fact that donations can bring a smile to an additional person’s life. In addition to giving to family members and friends, gifts/donations can be given to officially established centers or institutions with specific known projects.

16. Going on vacation  After long hours at work for a whole year everyone deserves vacation. Planning and saving for vacations ahead of time may make it easier to enjoy the vacation somewhere other than at home without major financial constraints.

17. Save it! Collect all the income that was accumulated from the steps above and put it into a savings account before it gets spent on other things. Once you manage to save some extra cash it is important to put that money into a designated account geared towards specific financial goals.  

 

Web Site: Tanzania Financials Online



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