According to a 2020 survey by Standard Chartered Bank, money management and budgeting are not a concern for Kenyan millennials.
According to the survey, 64% of Kenyan millennials have increased their indebtedness.
Since the first COVID-19 was reported in Kenya, 88 percent of Kenyan millennials aged 25-44 have found it difficult to manage their finances, compared to 64 percent globally.
The value of saving has been amply demonstrated in the previous year. To reach financial goals, a generation that loves to do things “on the go” and believes in the concept of “you only live once” must establish a balance between savings and consumption.
Here are four of the most effective strategies to start saving.
1. Make a budget plan
Forming a budget plan is the first step toward saving. A budget plan acts as a roadmap for keeping track of expenses and filling in the gaps that lead to wasteful spending. A budget plan, on the other hand, does not have to be one-size-fits-all because what works for you may not work for someone else.
As a result, you must plan your budget around three variables: cash flows, liabilities, and financial objectives. Using simple and user-friendly budget apps is one method to do this. These apps can help you keep track of your income and expenses while also allowing you to save money.
Budget Rule of 50/30/20
If you’re having trouble coming up with a budget, the 50/30/20 guideline is a good place to start. According to this rule, you must spend 50% of your income on necessities, which means things that are unavoidable. Utility payments, grocery expenses, school or college tuition, and paying monthly loan installments are just a few examples.
You must devote 30% of your income to wants, which entails expenses that might be eliminated. These expenses include things like eating out and frequently purchasing new clothes or devices. You must set aside the remaining 20% of your earnings.
Let’s look at an example to help you understand. If your monthly salary is KSH 50,000, for example, you must spend KSH 25,000 (50 percent) on necessities. You should spend KSH 15,000 (30%) on wants, while you should save KSH 10,000. (20 percent ).
It will be simple to save money if you follow this budget rule, and you will gradually develop the habit.
2. Reduce Unnecessary Spending
Non-essential expenses that come within the area of wants are referred to as discretionary expenses. Your house can continue to function even if these expenses stop. However, these costs are frequently the cause of millennials’ lack of savings.
It’s simple to limit discretionary expenditure. You can do so quickly and easily by:
Stop Obsessing Over Instant Gratification
Stopping yourself from acting on this inclination will save you a lot of money in the long run. The desire for immediate fulfillment frequently leads to impulse purchases, which hinders you from saving.
When you are able to suppress this temptation, you will notice a significant improvement in your spending patterns, which will naturally boost your savings.
Before you buy something, do some research.
Impulse buying frequently leads to poor decisions and is a major stumbling block in the savings process. As a result, think about whether you really need the item before you buy it.
For example, if a new mobile phone comes out and you want to buy it, see if your current phone can handle the work and has the features you require. If not, it’s pointless to replace your old set with a new one.
3. Make Small Lifestyle Changes
Millennials live lives that are substantially different from those of preceding generations. Millennials value a variety of minor indulgences in their lives. However, not all indulgences are bad, and certain lifestyle changes could help you save a lot of money in the long term.
Small Changes That Add Up to a Big Difference:
Bringing Your Own Food Rather Than Eating Out
If you bring your lunch to work at least four days a week and just eat out once or twice, you can save a lot of money.
Making Use of Public Transportation
Instead of driving your own car or taking a taxi when it’s unnecessary, you can take public transportation to work on alternate days. This will greatly lower costs, and, like food, will add up to long-term savings.
You can also take shared taxis or shuttles, where the fare is split evenly. This, too, can assist you in making significant savings.
Exercise and Have a Healthy Diet
Most of us are exposed to numerous ailments at a young age as a result of our sedentary lifestyle, which necessitates the use of medications for an extended period of time. Regular exercise and a healthy diet, on the other hand, can help reduce the likelihood of numerous ailments, lowering prescription costs.
The COVID-19 epidemic has also highlighted the importance of including health insurance in one’s investment portfolio. Even if you are covered by your employer’s group insurance plan, you should consider purchasing an individual health plan that you may tailor to your specific needs. If you have health insurance, you won’t have to dive into your money if you end yourself in the hospital.
4. Consider instruments that require forced savings.
This strategy allows you to save while also giving you the possibility to expand your money through the stock markets’ numerous financial instruments.
SIP stands for systematic investment plan, and it allows you to put a certain amount of money in a mutual fund at regular intervals. SIP is a sort of forced savings if you look at it closely. Your money accumulates and grows at the same time in a SIP.
While there is no set deadline for processing your SIP, it is best to do it as soon as your salary is deposited into your account. You can check out some solutions investment solutions HERE.
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