Saving is Just the First Step, But a Critical One

• It is a critical step in defining your future and the trajectory on which you run your life;
• It has never been easy, anywhere in the world, for people to save and often, they need help of the nature we are providing.

So, at the risk of irritating or even suffocating you, the clarion call is for you to make saving a strong pillar of your financial management. You can really hardly talk of managing finances without giving saving a prime place. And operating without deliberate management of your finances is more like recklessly drifting towards financial crises. However, this piece is about drumming home the fact that a strong saving habit, as critical as it is, is not the end of that journey. A key step quite alright, but not an end in itself. Here are three major reasons:

• The Damaging Impact of Inflation
  If you crank up your saving mechanism and go full blast, packing loads of money into your house-ceiling, or better still in a savings deposit in the bank across the road, only to find a year down the road that the money you saved can only afford goods two-thirds the value you nominally saved, you'd possibly come to attack us for misleading you. Inflation is a feature of economies across the globe and governments continue to battle to stem it with degrees of success, but never absolutely. So money you just keep will lose value. Bank savings interest can hardly ever match the inflation rate, so that, too, may leave you short-changed. So, there is the need to be more creative in preserving your savings. The key is to use a medium that withstands inflation and leaves a positive real return.
• The Impulse to Nibble
  You could save money in a period, after mustering the will to do so, against all odds. What use will this be if, in a moment of mental slack, you deep into the funds and possibly for reasons that don't match up? The pressure to nibble at money you just saved by merely keeping it aside will always be there and you're not alone in facing that urge. There are also circumstances that will tend to justify tampering with such savings, eventhough against your ultimate interest. The way to beat all those is to go beyond merely saving to take further action to really put that money out of easy reach.
• The Catalytic Impact of Growth
  Saving part of your earnings and watching the cumulative increase will warm any normal heart and enliven the spirit. That effect however, gets grossly amplified when you plant your savings properly and begin to enjoy multiplier benefits. When you really earn good returns on your savings and suddenly see yourself positioned to do much more than you ever imagined, it triggers an unquenchable zeal to drive it to further heights. So help motivate yourself further by making your savings pay even more!

Just hold these three reasons, though you will find more. Their summary is that while you get going with a saving plan and begin to accumulate seed capital, it must be seen for just that - as a seed to plant for even better results. Considering that this process of 'activating' your savings may invariably attract some risk (even just keeping it has some too), you must weigh the options you have for managing your savings. Here are some guides.

• A Portfolio of Financial Assets
  You many think it needs multi-millions of Naira to acquire a portfolio of these assets, but that's just not it. You can work with any amount you have, starting from a few thousands. Why a 'portfolio'? Because you need a fairly diversified 'bag' or 'basket' of these assets as a way of putting your savings in a position to earn money without being exposed to undue risk. A portfolio, well-selected, will do better than your savings account (it may include some money in savings) in beating inflation, will most likely turn in returns that justify your effort and, at the same time, take the more away into forms you won't encash at the flip of your finger. The challenge here is in selecting the items to include in this portfolio, in order to meet your specific needs. That process of selection is called portfolio construction, which involves asset allocation. As we always say, acquire some knowledge about these things, and we have lots of resources here to help out. Besides, you can always consult a financial adviser to assist you. You won't know it, but the potential loss you can incur through errors, which includes missed potential earnings, will always be far more than the cost of securing professional advice.
• A Business Venture
  This is another major way of putting your savings to work, albeit a more risky option. For the increased risk, it also offers unlimited potentials for profit. So, you take a lot more risk for a stake in much increased potential returns. A word of advice though. If you are not at home with a business idea you want to stake your savings on, better think again. You either spend time to learn or think of something else. You should be in a comfortable territory to stake the money you have laboured to save as, it would be painful to all of us, if you should lose it. One way to further this is to be personally involved. It is a potentially bad investment, especially in our environment, to invest in a business other people are to run for you. It hardly works and there are a lot of sad experiences to buttress this. So, play this option carefully.
• Capacity Building
  This can hardly be intended for all of your savings, but investing in self-development in very critical areas is one other wise thing you can and should do. It doesn't directly turn out Naira for you and that's why it's easy to overlook. Yet, the knowledge and skills you acquire could easy see you generating multiples of current income, putting you in a position to save more and invest bigger. Don't play down on the critical need to develop yourself.

So, there it goes. These things may sound challenging, but they are not that complicated. The center is in getting the mind attuned to the purpose. While saving may not be easy, many people have learned to get it working for them, simply because they came to that realisation that that was the key to unlock the future. When they learned to apply the controls it calls for, often at great sacrifice, the logically learned to take good care of the savings by planting it in fertile ground, usually sound investments. This can work for you too and really, that's the right way to get your life on a track you choose for yourself. Otherwise, you'll probably operate in a meliu where you wield no control, much to your detriment.

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