Last week, I started telling you of how I met somebody in Chitipa who was looking for advice on how to have peace of mind with his personal finances. I did mention that my advice was simple but punchy: spend less than you earn! But his reaction was interesting “akulu mukuyowoya nthena chifukwa mukupokera ndalama zinandi. Pala ningamuphalirani izo nkhupokera ine mbwenu mulirenge misozi.
Ndalama zane zikumala pambeli nindapokere, sono zakuwika padera nizitorenge nkhu?”Ã¢â‚¬â„¢ (you are advising me to spend less than I earn because you have a fat salaryÃ¢â‚¬â€you would cry if I revealed mine. There is no way I can cut spending and save).
But listen. Spending less refers to the fact that one does need to cut their spending. The first step doesnÃ¢â‚¬â„¢t need to be anything drasticÃ¢â‚¬â€nor should it be. Many of the more extreme money-saving tips come from people who have already tried out the basic tips and love them, so they seek out more intense strategies to further cut their spending. I do this myself Ã¢â‚¬â€IÃ¢â‚¬â„¢m always trying out new money-saving strategies, discarding the ones that donÃ¢â‚¬â„¢t work for me and keeping the ones that do.
Here are some five, but not exhaustive, ways to get started. First, go through every monthly required bill. Ask yourself if you really need that service or item at all. Do you really need the expensive foreign herbal tea or local tea brands would do? Do you really use your two cell phones much at all, or could you just maintain one handset and cut down on phone credit? Do you really need to drink the premium beer brand every day of the month or an ordinary beer would provide the same if not better satisfaction? Do you really need to subscribe to a full DStv package when all you do is watch Aljazeera News which you can get on MBC TV? Then, go through each bill and see if there are any optional services you can eliminate.
Second, keep diligent track of your spending. Keep a notebook in your pocket and write down every expense you have. Sounds theoretical but I did apply it with a high degree of success Ã¢â‚¬â€you just have to do it for a couple of months. The simple process of doing this will make you think twice about unnecessary expenses. When you do have a monthÃ¢â‚¬â„¢s worth of expenses written down, take a careful look at them. Ask yourself whether or not each of these expenses actually contributed to the value and joy of your life. That process will offer a lot of insight for you as to where your spending is going to waste.
Third, look carefully at your routines. Watch what you do every day (or most days). Are there things you do each day that cost money like passing by the bottle store every day on your way back from work? Those things are the most powerful ones to adjust, as trimming just K100 from your daily spending saves you K36, 500 a year. If you stop at a salon each day, why not buy your own hair blower and do it at home? Do you eat out every day? Perhaps you can start packing a container from home (brown bagging) a few days a week. Look at every regular expense you have.
Fourth, get a better bank. The vast majority of Malawians are with banks that donÃ¢â‚¬â„¢t treat them very well. No interest at all on their checking accounts, tonnes of fees for ATM use and draconian overdraft policies. A tiny interest rate on savings accounts. Monthly usage fees of all kinds. All of these things are a waste of money. Switch your accounts to a bank that respects you. Use the bank that gives you high value for your money Ã¢â‚¬â€œ I wish I could suggest some for you but my hands are tied due to legal limitations. The best is to compare these things across banks and talking to knowledgeable friends. Get a bank that provides you great customer service, better interest on your checking account, a solid interest rate on your savings account, and minimal fee on transactions.
Finally, do some one-time energy improvements around your home and monitor your water bills and ground phone credit. These tactics could cut down your utility bill significantly, directly reducing your bills. Often times house servants and garden boys or family members can heavily abuse such resources.
My Chitipa friend was nodding all the way through. Watch out on what I told him on how reduction in spending can be complemented by tactics at increasing his earnings.