Traditional Ways Of Saving Money In Nigeria
Mary needed a vacation fast. The burnout at the workplace was bad, and she needed a break. The downside now was that she barely had money. Taking away transport fares, feeding and other contingencies left her with just a little to save. Bella told Mary about some traditional ways of saving money in Nigeria.
Before the advent of online saving platforms, traditional ways of saving money were in existence. People saved for different reasons and the topmost was to begin businesses or to make a purchase. Savings has always been a lifestyle of man.
Related: Piggyvest vs Sumotrust vs Cowrywise; Which is better?
Asides online savings platforms such as Sumotrust, Piggyvest, and Cowrywise, there are traditional ways of saving money in Nigeria that can help you achieve your financial goals and targets.
Traditional Ways Of Saving Money
1) Financial institutions like banks.
This is a traditional way of saving money in Nigeria. When using a financial institution like a bank, money is deposited in savings account. Using financial institutions gives a sense of security as against keeping money at home. Saving money in the bank also accrues a little amount of interest. Several types of accounts executive deposit money in, but in the traditional method, the savings account is mostly used.
2) Pay yourself first.
This is a system of paying yourself or putting aside some money for yourself before assigning money for other activities. This method can be done with a cheque, a savings account or automated accounts.
Using a cheque, write the amount of money you want to pay yourself and cash it. You can pay directly into a savings account or keep aside.
Using a savings account, make a direct transfer straight into the account from your checking account. Understand that the money should not be touched for any reason because it is your “salary”.
For an automated account, you can ask your employer to pay the desired sum straight into a savings account and the rest in your checking account or you can tell the bank to deduct a particular amount of money, per deposit, into a different savings account.
Another not so popular and newer technique is using an online savings system. The online account is connected to your checking account in the bank. A particular percentage is deducted depending on the time frame you chose.
3) Thrift societies.
This is also known as Esusu amongst the Yoruba, Isusu in Igbo and Adashi amongst the Hausas. Thrift societies have existed in time and is not a new feature. It has existed in time as a traditional way of saving money. It is an informal community-based savings scheme. The community can be made up of individuals hailing from a particular area, work colleagues, traders, farmers in a settlement etcetera.
Thrift societies were documented to have originated from the Yoruba tribe of Western Nigeria.
The thrift societies work by financial contributions from members on stipulated time frames. The time frame could be weekly, fortnightly, or monthly. Each member of the group takes turns collecting the pooled money on monthly basis or as when agreed upon. The member to benefit from the contribution that month, is agreed on by a ballot system. Using the ballot system cancels bias and rules out prejudice. It also allows for unity amongst members.
There are usually written down rules and regulations guiding the functioning of each thrift society. Fines are agreed upon and paid if a member goes contrary to their code of conduct.
4) Using change wisely.
A lot of loose change if used wisely could go a long way to meet needs. The secret to using money wisely in this method is spending the “big bills” for the “big things” and the loose change for the small things. Loose change is the remnant of money gotten after expenses are made. Loose change can be put in a piggy bank and accumulated till it gets to a substantial amount and is then paid into a savings account. To overcome the temptation of dipping hands into your savings, you can get a wooden safe with a lock.
5) The envelope method.
This is a traditional way of saving money. Firstly, remove the percentage you want to save, then write out major financial plans for example transportation, electricity bills, gas bill, clothing, rent etcetera. The trick is to stick to your plan and don’t spend bills outside the plan. The percentage of savings should be kept aside and strictly adhered to.
It is important to remove your savings percentage before you set other funds aside.
This has always existed as a traditional way of saving money. In recent times, the use of credit card limits and applications that help you limit spending has taken the place of writing down budgets.
To write a budget, you will need a book. This will enable you to track your spending in the coming times. Write down everything that money is spent on and allocate money to each. After the money is assigned to different items, the remaining is kept away for saving.
Writing a budget may seem like an old method but it works well and helps you tailor your spending.
7) Cash only method.
Saving money while using an ATM card can be quite difficult honestly. If you use your card for making purchases and every other thing, it might be affecting your savings culture. To overcome this challenge, it’s best to use cash. Cash makes you overcome the temptation of impulsive buying especially if you have exactly what you need. It’s easier to live on a budget with cash than ATM cards.
Also Read: 6 online savings platforms in Nigeria with high-interest rates 2020
Traditional ways of saving money are not trustworthy, neither are they high yield. In recent years, financial literacy has made us get exposed to better savings opportunities that your high interest.
Saving money is good and should be encouraged but with the ever-rising cost of living, saving money makes you accrue losses. It’s more ideal to invest money than save. Investing generates a higher interest as against just saving money. In recent times, there exist online platforms that can educate you on Investments to make and how to invest your money.