When I was much younger, I struggled a lot with my getting my personal finance in order. I spent all the money I earned, either on myself or because I wouldn’t say no to other people’s requests. I was Mama Christmas, giving away most of my things . It took years of my mother’s complaints about my money habits before saving took root in my mind. And by the time it eventually did, I already had many financial obligations. As an adult, I can confidently say this: No matter how little your income is, you should invest and save. If you are not actively saving–maybe because you have too many expense–then you will need to track your daily spending habits. This will help you get a handle on your finances, as well as show you things you can cut down on or cut off entirely from your budget.
A lifestyle of personal savings — even on a meagre salary – is vital for long term financial freedom. I think of this as Finance 101. Sometimes though, the process of saving money will require an honest self-appraisal to figure out if you need to cut down your expenses or broaden your income net. This is because some people’s financial reality does not give them the freedom to save. And in such instances, it is more efficient to increase their earning capacity. Focusing on building earning power—whether through your work or returns on investments—makes the idea of saving more feasible.
Below are a few indicators to let you know if you need to increase your earnings:
You Have Only One Stream of Income
No matter how much you earn, saving from a single source of income may ultimately be limiting. This is because events such as an accident, job loss or sudden change in circumstance(s) can create a shock. Multiple streams of income–whether from your job + returns on investments, or your full-time job and side hustle–is a way to absorb emergency expenses and unforeseen circumstances.
Increased Financial Obligations
As you grow as an individual, your responsibilities will increase, and the costs of maintaining your household may also get higher. If your income does not grow at the rate of your obligations, your finances will bear the pressure and your savings will ultimately be affected. So in this sense, when your responsibilities increase, your priority should be to increase your earnings and not merely to save.
When Saving Becomes Expensive
This may sound strange, but please hear me out. Sometimes, a lot of resources are wasted in a bid to increase savings. Think about trying to cut down money to fuel your generator when the generator in itself powers your productivity (depending on the nature of your job). Like people say, Time is money. If the amount you save is not more than what you could earn in the same time frame, you would merely have succeeded in losing money.
All this is simply to say that, rather than just saving money, you need to grow your income enough to enable you both save and build wealth over time. What are your experiences on savings and increasing earnings? Please share via the comments section, and let’s get that money, sisters!