Saving money is about discipline, habits, and consistency. To save, you need to be ready to sacrifice your current consumption for the sake of your future. Saving money is important if you hope to have financial freedom and security in financial emergencies. With no savings, it’s easy to get into debt and this could lead to emotional, physical, and psychological stress, not just for you but your family as well.
If saving is so important for you and your family’s wellbeing, why do people not save?
Several reasons come to mind, one of which is a lack of financial knowledge. Most people are unable to make the right decisions about financial services such as loans, financial investments, and saving options because they are simply not empowered to.
Another factor is an individual’s perception of money which tends to influence how people save or spend. While some people feel empowered when they have money, some others think it is wrong to have a lot of money. These differences are indicators of how people manage their money. This tends to be a function of factors like race, sex, age, personality, or even social status.
Financial Self- efficacy is another integral factor that influences an individual’s confidence in their ability to make the right decisions when it comes to managing their finances and choosing the financial products and services that will serve them well on their journey to financial freedom.
While all the factors mentioned above influence our success in the achievement of our personal finance goals, to reach these goals, we must begin by having a plan that we can stick to. For a solid financial planning process, the following steps must be taken:
- Assessment: know where you are financially in terms of Household budgets and living expenses.
- Determine your financial goals, this will help you differentiate needs from wants.
- Develop a plan by identifying investment alternatives and evaluating your options (you could consult a financial advisor/planner for this.
- Develop an action plan and implement it.
- Review, evaluate and monitor your plan.
If you go through these steps, you are well on your way to financial freedom. See you at the top.