Don't risk saving so much that you get hurt

Kenya: Do you want to buy a car, go on holiday at the end of the year, buy your own home and also pay for your children’s education without strain? Are you planning to buy an expensive household item? If the answer to any one of these questions is yes, then you must hit the ground now and start saving.

Financial advisers will tell you that the way to a successful financial future is through saving. Many people who today enjoy financial independence say they achieved this by establishing a savings routine that took a lot of determination and dedication.

Although saving is the surest way to a successful financial future, spending what we earn is easier than saving for a rainy day. However, the worst situation occurs when we do succeed in saving, but end up doing it to the point of hurting ourselves.

Financial experts and life lessons have taught us that the best way to save is to have a workable budget and to keep track of our expenses. By doing this, you can adjust your spending.

Jacinta Nyakio, a financial expert working in Nairobi, observes that although saving money for a rainy day is a good idea, you should have a savings plan to avoid over-committing yourself.

“With a good savings plan, you can decide what to spend and what to save. This is possible after carefully evaluating how much you earn and how much you spend. Even if your ends are seemingly not meeting, you should be able to spare some money for saving, if you plan well, without hurting your pocket,” advises Nyakio.

Many people hurt themselves by being mean to themselves in the name of savings. They opt not to buy things that could add value to their lives just because they don’t want to spend.

“I know someone who took years to buy a TV in the name of avoiding expenditure on ‘luxuries’. It might not be necessary to buy a big-screen TV but if you won’t let yourself enjoy the services such a gadget brings in the name of saving, then you miss the point,” says Nyakio.

She adds, “Spending money on things that add value to you is not being extravagant. However, you must not fail to save.”

Financial experts say many people who are able to save without hurting themselves have a clear objective when they go shopping. They don’t just buy things because they are appealing.

Nathan Kazungu, a financial advisor, says, “Planning your savings programme can spare you a lot of hassles. Although it requires a lot of dedication and sacrifice for you to achieve your personal savings goals, the financial benefits that can come from a well-planned savings scheme far overshadow the setbacks you may have to bear with initially.”

He adds, “A good savings plan is also not possible without one cutting down on things that are unnecessary or relatively unimportant. This is because one can use the savings to acquire particular goods or services that are more valuable.

“You could try reviewing what is important to you as this would help you understand yourself. You could also review the way you spend your money on  various items and then question yourself regarding your expenses to determine whether or not they are justifiable,” advises Kazungu.

“Those able to save money are those who avoid spending by habit as this could easily be unnecessary. Why spend so much money on computer services daily instead of buying a computer? Paying a few shillings for the service does not mean this habit has to continue endlessly. If you re-evaluate all your habitual spending, you might discover that there is a lot you can relieve for savings,” advises Kazungu.

He adds, “To save and avoid hurting yourself through saving too much, just know when to loosen up. You should be able to weigh when things are tight and relax a little. This way, you are unlikely to get into debt as you have control over your finances.”

For example, when saving to buy something, it is important to know how much it costs and, therefore, how much you need to save monthly.

“Saving money without a purpose is dangerous as you do not know how much you want to raise and for how long you are going to save. Are you saving for one month, a year, or is it for retirement?” poses Kazungu.