How to enhance your capacity to save

People save for a number of reasons including the following;

  • Education for children and self
  • To acquire an asset like land , house , car and others
  • For retirement
  • Cater for emergencies like medical bills
  • For vacations
  • For marriage and birth of the child

For you to enhance your capacity to save you have to consider the following;

Purpose of saving

The purpose of saving must be clear from the word go including the amount involved and the time frame within which the savings must be done.

Sources of income

One has to document sources of income and the amount expected from each source. The sources will include employment and business income. You may also consider ways of either enhancing income from current sources or creating new sources all together.

Family Budget

You have to prepare a family budget of income from all sources and expenditure for the year. The family budget expenditure will include food, transport, accommodation, medical and school fees among others. Discuss the family budget with the family members if possible although this may alien to African men.

Keep records

It is advisable to keep cash account which will track all your income and expenditure by budget line to avoid overspending.

Keep expenditure at minimum and within budget

You have to find ways and means of keeping the expenditure at minimum levels and within the budget. You can only save if you learn to live below your income level. If for example your income is US$ 5,000, your expenditure must below the income of US$ 5,000. Consider ways and means of saving on your expenditure like energy, water and food. Learn to justify the necessity of each expenditure line.

Learn how to shop

Do not shop on impulse but plan for it. Take time to compare prices and quality. Avoid doing your shopping only on high streets. Ask friends to guide you where to go and shop quality items at a bargain both locally and abroad. If you have an advantage to travel, plan to do you’re shopping abroad but taking into account excess weight and tax issues.

Keep your savings in interest earning account

Search for licensed financial institutions which pay reasonable interest on savings. Be careful of people who will approach you with promises of multiplying the money over night. These are crooks!

Do not lend your savings to friends to handle some of their emergencies unless you are absolutely certain that they will payback.

Consider doing safe business with your savings

Do not expect to earn much income in terms of interest earned on your savings with financial institutions. The interest earned may not be enough to maintain the value of money given the inflation and other financial and economic factors. The safe investments could include buying and selling farm produce provided you are certain of quality issues and market situations.

Credit cards

Be careful if you use a credit card as it can lead to overspending. There is a tendency to spend more if you have plastic money than physical cash.

Income, expenditure and savings formula

Always keep in mind the income formula which states as follows;

Income= expenditure + savings


You can only save if you learn to live below your income levels.