Pep Talk with Dedun: How To Save While In Uni
7:00:00 PM
Long time no word from me. It's tooo laate to apologise, it's tooooo laaaatttteee. But I'm sorry guys, unfortunately blogging was the least of my worries and I also had writer's block, kinda lol. I have another interesting series I'm about to start with this post. It will be called Pep Talk With Dedun.
On this series, I will share my advice on anything I can and mainly focus on my fellow Uni undergrads as being an undergrad is the most recent experience I have. So today, let's talk about How To Save. Grab a pen and a paper as this will be an insightful read.
About two weeks ago, I wrote a post on my Facebook page,
"Tgif! But u probably feel indifferent because you are broke. Early morning advice.. Save people! Save money! It is a very common thing for students to spend lavishly because they know for certain that there's another money coming soon. But u see how this naija economy just creeped on us? That's just one of the things that can happen. We don't usually pray for the other sudden "causes" but sometimes they happen. So pls I urge u guys to learn how to save. If you want to know how I save, u can message me. But yeah Save!!!!!!!!!!!!!!!. Have an awesome day."
- How much is your Monthly Allowance?
- Through what payment method do you get money from your sponsors?
- How much do you need to have a comfortable month?
- Do you have the basic necessities for the school year/semester?
- What percentage are you willing to save?
- Do you have a student account at a good local bank?
- Do you have a savings account at your home country?
- What are the methods of saving?
To answer the questions, I will have a fictional illustration of a student getting $500 per month for stipends. (That answers the first question). Let's call the student Timi.
Timi gets $500 a month via bank transfer to his dollars account. After withdrawing the money, he only has $470 left because most banks charge to withdraw and it's higher when it's a foreign currency. On average, he needs roughly $250 to survive (most important being food and transport and others are basic school necessities like writing pad, pens, photocopies/printing etc) and when he wants to live lavish, he needs $400(random shopping etc). This gives us a scale of $250 to $400. That leaves us with $70 with no task given to it. In an ideal condition, that already is your savings and in this illustration, that is 14.89% of your monthly allowance. Now multiply that by 12, you would have 178.72% of your regular monthly allowance already saved at the end of year. In money terms, you would have $840 saved in a year.
Now to the last 3 questions. Before you open a bank account, make sure you ask for the best account for students and also ask your friends for their opinion on the best bank in town for students. Open an account with the bank you've researched is the best one for you. Also important is for you to have a savings account in your home country (to be elaborated soon).
Finally, here is the most important part, the methods of saving. We have already established that Timi has $70 up for saving and in the best scenario, he has a good student account and also a savings account in his home country. Listed will be the most practical to least practical methods:
- Fixed Deposit: This method has been the best for me and I must warn that for these methods to work, you have to be disciplined and dedicated to save money, and don't be a wasteful spender. When I made my first fixed deposit (hereafter tagged FD) in 2009, the bank I used had an okay FD interest rate per annum which was 5% and I could re-fix every 3 months meaning I got an interest of 1.25% every quarter of the year. This helps because you know if you break the cycle before your deposit matures, you are assured there's no interest for you. Simple and straight forward. After each cycle, you can increase your deposit but what do you do with the money you want to add while waiting for your deposit to mature? That's another valid question. Don't spend the money! You can leave it in your account and act like it's not there. Whatever you do, minus the amount from your total balance and make that your new balance. This is where discipline comes in. It's all in your hands. The second part of FD is where the home country savings account comes in. Throughout the year, monitor the exchange rate closely because you would need to take some money back home when you go for summer break and for all of these to make sense, you don't want to withdraw your yearly savings only to exchange it poorly to your home country's currency. As I know, most banks in Nigeria have good FD rates, ranging from 6-9% interest per annum. The money you saved for the school year will have more interest if you use your home country's bank FD account. This applies mostly to people here in Hungary because after the Hungarian economic meltdown, the FD interest rate is close to non-existent, currently at 0.1%- 0.9%). Please note, if the rate is best in your school country then just leave it there till you are ready to graduate.
- Savings Account: Although the interest rate is not as much as in FD, it's quite significant. The bank I use in Nigeria currently give me interest rate of 5% per annum provided I have at least N100,000. It's almost like fixed deposit in the sense that you know you can't have less than N100,000 but the difference is that you can withdraw and use your money anytime you want, you don't have to turn on automatic cycle renewal as in FD and you get your interest anytime they want to pay the interest (i think it's per month for me, not sure).
- Loan on a condition it is returned with Interest: Although not reliable because people can go back on their word or fail to come through on agreement. Before you loan, make sure you are loaning a trust-worthy person, have a signed agreement and also have a witness! The two of you can come up with the length of loan period and the Interest rate. Mind you, I'm talking about large sum of money not the occasional small amount you give your friends. As loaning a large amount is a serious matter, your signed agreement can be tendered to the police hence why you should have one!
- Give to a money-wise friend to keep for you: (Disclaimer: At your own risk. Money can ruin friendships) If you know you can't save at all and can't keep a FD account because you will definitely break the cycle every now and then, it's best you have a close friend who understands your struggle and is stubborn enough not to give u money every time you ask for it to buy something useless. Of course there's no interest with this one but check out the Timi's illustration, at the end of the year, you would have saved $840.
- Spend wisely: This is kind of on the least practical because for some people, they just can't see money and not spend it but it is very advisable that above all things, you are diligent with spending money. If you won't die without having it, don't buy it. If there's no immediate use for it, don't buy it (well except it's on some mega sale that you will never come across again and you know it will be useful soon).
When opening a fixed deposit account in your home country, be sure to let them know that the interest should be added to the FD amount and not paid to your savings account. This increases your FD balance and in return increases your interest over time instead of spending the interest.
And that brings us to the end of this post. I hope it was a good and useful read. Please feel free to write a comment and anything encouraging so I can be gingered to keep up with the series. God bless.
Dedun
2 comments
Thumbs up, i needed this
ReplyDeleteNice piece
Thanks Ibro!!
DeleteYou know I'd love to hear from you. Please comment. Mwah