Develop the habit of saving money is the foundation of financial success and means of becoming a business owner. Therefore, you need to learn how to save money to become a business owner. This is important whether you live on a month’s salary or you are successful financially. So, this article explains the 7 simple tips on how to save money to start a business.
7 Simple Tips on How to save money
Record all expenses
The first step to save money is for you to know how much you are spending monthly. Keep records of all your expenses such as foods, drinks, domestic expenses, and others. By the time you have the records of all expenses, groups them into categories such as food and drinks, mortgage, and others and find the total amount of each category and whole total.
Set a budget
Once you know how much you spending monthly, the next step is to set a budget based on your level of income. You can do this by measuring the recorded expenses with your income and set the spending limit to reduce overspending. It is very important to make provision for unexpected expenses like Vehicle breakdown and maintenance.
Reduce the costs
The next step is to try to reduce your expenses if you can’t save much money due to high expenses. To save money, you must make sure that every dollar of income is accounted for and send to your savings account. Therefore, it is important to reduce the amount of money you are spending on non-essential items such as vacation, drinking, and others
Clear the outstanding debt
If there is any outstanding debt, the next step is to clear it to improve your saving habit. Because, failure to pay off your debt while aiming for saving money, you will end up using the money to pay off more debt in the long run as a result of accumulated interest. However, if your debt is free from accruing interest, you can start your saving because you will end up paying the same amount for the debt in the long run.
Set savings goals
You need to set goals for your savings. You can set the saving goals by thinking of what you want to save the money for such as retirement, marriage, starting a business, and others. However, if your goal is to start a business, you have to decide on the type of business, the amount requires to start the business and others. All this information can be obtained from your business plan for the business. Therefore, the amount of money required to start the business will determine how long your savings will take.
Open account for savings
The next step is to open an account for your saving. The type of account to open depends on your goals. You can open saving accounting on which you will be receiving interest if you have short-term goals or a Certificate deposit account at an interest rate higher than saving if you desired to fix the money for a certain period. However, you can open a retirement savings account or invest your savings in securities such as shares, if you have long-term goals.
Allow automatic savings
The best way to ensure discipline in your savings is to make your savings to be automatic. More so, banks offer automatic transfers between accounts. You can give your bank an order to automatically transfer the amount of money from your account to your savings account. This prevents you from overspending and allows you to meet your target savings. Banks allow transfer from different accounts in a certain proportion to meet your target amount to your savings account.
In conclusion, follow the above simple tips on how to save money will help you to achieve your goals. Saving is very important if you want to achieve financial success, especially if you plan to start your business. However, setting goals for your savings will make it to be easier.
Afeez is one of the founding partners of Marasas Consulting limited. He consults for both individuals and entities in the area of accounting, management, audit, tax, and investment. He has a wide range of experience both online and offline which allows him to provide relevant and timely professional advice and assistance to business owners with their accounting, tax, management, audit, and investment plans.
Afeez is a member of the Institute of Chartered Accountants of Nigeria (ICAN) and a member of the Nigerian Institute of Management (Chartered). He is a certified Google analyst and strategist. He earned his Bachelor degree in Management and Accounting from Obafemi Awolowo University, Ile-Ife, Nigeria, and earned an ordinary national diploma in Accountancy from The Polytechnic of Ibadan, Oyo State, Nigeria. He earned certification in “Excel Crash Course” and “Reading of Financial Statement” from Corporate Finance Institute, Canada.
Afeez is dedicated to helping clients achieve business success by helping them to establish solid and sound accounting, tax, and financial processes.