I doubt anyone would set out in life without a plan for their future finances or for that of their loved ones. However, we sometimes forget about “saving for the rainy day”. This is something my father always told us when we challenged him on why he chose to live a very modest and contained lifestyle even when he could afford to live in a more extravagant way. I have therefore learnt the following from him :
- Be very prudent with your spending.
- Always set aside something for the rainy day – Plan for the future.
The main problem individuals encounter when they do not have a savings culture is their inability to provide for the basic needs for themselves or their loved ones.
With the changing roles of women in our society, women must take up more financial responsibilities in our homes. A woman should be able to save at least a third of her income. Income from either paid employment, trading, or house-keeping allowance. This would help women augment the financial needs of their households and adopt a savings culture.
There are so many investment opportunities out there. Individuals need to be clear on their risk appetite as every investment comes with both risks and returns. Here are some potential investment options listed below :
- Stock market
- Fixed deposits
- Treasury bills/ Government bonds
- Mutual funds
- Land or property (Real Estate)
- Investing into startup businesses
- Gold, precious stones etc.
Be clear on how much you want to invest and for how long. That would also determine the kind of investment one should choose.
Also, be clear on what kind of returns would compensate for your investment. The return on investment must be good.
As women, we must always strive to live below what we get as income and cultivate a savings culture. Do not spend all you earn; save for future events that would happen inevitably. Women should take their personal finances seriously. This is a skill we all must acquire at some point in our lives to ensure we avoid situations where we are unable to be financially independent. Women should be clear about every asset and liabilities that they have. Technically, you should understand the “balance sheet “of your household/home. The aim is to always ensure that your assets are far more than your liabilities.
Assets could be in the form of:
- Investments (Shares, bonds, treasury bills)
- Cash in bank
Liabilities on the other hand are obligations you owe or need to pay. Examples are: Rent, taxes, school fees for children, domestic staff, grocery, repayment of loans/mortgage, Utility bills, car maintenance, etc.
I always advice that women put down a list of what they require to survive in a month without putting in excessive expenses. Just basic and fixed needs. Almost construct a profit and loss statement for yourself where your income from employment or business is seen as your revenue and then your monthly/annual expenses are deemed as your expenses.
My question is, “are you making a profit to save for the rainy day or are you making a loss?”
If you are not making a profit, a lot of us then resort to borrowing rather than revisiting our expenses and curtailing them till we start making a profit.
*Remove the excesses or inefficiencies in your expenses*
Potential areas to look at:
- Rent Versus Buy
- Managing wardrobe expenditure. (Aso ebi / excessive clothes)
- Ability to say no to luxury and even to some of our children’s demands
- Practical cars vs Fancy cars.
- Curtailing your domestic staff cost
- Pruning down your grocery bills (or buy in a more efficient way)
- DSTV – Do you want to relook at the package ?
The importance of saving can never be overstated. It is an extremely important skill in order to thrive in the world we live in today. As women, we must all strive to live within the limits of our income with an allowance to allow us save.
- Adesola Sotande-Peters.