Do Not Eat Tomorrow’s Yam Today: A Guide to Cultivating a Savings Culture

Imagine life without food. Tough right?

The Pareto or 80:20 principle is one of my favourite decision-making models. Applying this principle to your finances means you spend 80% of your income on your living expenses and save 20% of your income.

If you earn 800,000 monthly, you should spend 640,000 on your needs and wants then reserve or save 160,000. This is a very straightforward approach to savings, but it is really not easy. It takes maturity and self-control to make such a decision and stick to it. The truth is our needs and wants always go beyond what our earnings are. Still, we must keep some money aside as seeds.

Farmers plant food, to reap more food. Imagine if farmers consume all their produce without thinking of seeds for the next planting season. There would be nothing to regenerate more food.

If you don’t have a seed, you can forget about harvest.

No doubt, yam is delicious, but what shall it profit you to eat tomorrow’s yam today and be hungry tomorrow? Learn to save.

Your Favourite Realtor,

Amanda.