It takes money to engage in any type of savings; be it emergency, retirement, or personal savings.
It is true that money don’t fall down from heaven, neither does money grow on trees. But it is also true that with savings and good investment, your money can find oneness with growth.
In a world where everything is up for sale, and things are so framed in such a way that one cannot actually resist their magnetic effect of buying, mastering the art of saving money is a thing not just anybody can possess. In fact, only a selected few can actually claim authority in the art of saving money. And those few are already standing on the threshold of success.
What are the types of savings?
There are many types of savings. But for the purpose of better comprehension, we shall confine our discussion to just three types; emergency, retirement, and personal.
What is emergency savings?
Emergency Savings can be defined as those funds used to set aside money needed in the event of a personal financial dilemma, such as the loss of a job, a debilitating illness or a major expense.
The purpose of emergency savings is to improve financial security by creating a safety net of funds that can be used to meet emergency expenses. Emergency savings as well reduces the need to draw from high interest debt options, such as [credit cards} or unsecured loans.
Why is emergency savings important?
Living without emergency savings is a risk too high to take in a country like Nigeria where everything happens unprecedented. Do not think for once to hope on the goodness of friends and relatives should the worse present itself. For experience has taught many to do otherwise.
Things happens, the inevitable appear; but with an emergency savings, the damage can be minimized or even checked!
What is retirement savings?
Retirement Savings is the type of savings done for the sole purpose of raising funds for the cold era of retirement. Most people are afraid of retirement due to bad retirement savings culture.
As a Nigerian employee, if spending money unnecessarily has become to you a habit, then you should prepare your mind that your retirement days will be dark and hard. This is so because, the Nigerian government care too less for pensioners. Our retirement scheme is relatively poor compared to advanced countries.
How can I start saving for retirement?
What is personal savings?
Personal Savings is a type of savings used by an individual for that person's own needs. It is a relative term to differentiate them from those accounts for corporate or business use.
Another way to save money personally in Nigeria is ‘Esusu’ or ‘Ajo’, as it is locally called.
‘Esusu’ is an informal means of collecting and saving money through a savings club or partnership, practiced across the country. It is usually taken in turns by "throwing hand" as the partners call it. Contributors pay a specific amount of money in one hand when it is collected to a person. Each month, every person in the group will collect a sum of money until the next time, when another ‘susu’ is thrown
Why is savings accounts important?
How can i save more money?
Tips to encourage savings culture
Financial experts recommend that an emergency savings account should contain enough money to cover at least three to six months of living expenses. Banks do not carry accounts labeled as “Emergency Savings account.” Rather, the burden falls on an individual to set up this type of account and earmark it as capital reserved for personal financial problems.
Additionally, the best time to think about planning your retirement is while you're still earning. These days, the vast majority of employees are responsible for their own retirement. Opening an Individual Retirement Account is an easy and tax-advantaged way to build up a future nest egg.
On the whole, the advantage of having a separate personal savings account from emergency or retirement account, is that it makes it easier for the individual to know his or her limitations in terms of spending. Admittedly, when various savings accounts are joined together, the possibility of making use of that which was not meant to be used cannot be denied.