A Beginner’s Guide (With Tips From Odunayo Eweniyi) – Piggyvest Blog (2024)

Saving money seems simple, but it’s probably one of the hardest things to start and be consistent at. But don’t worry! As always, we’re here to help you learn how to save money — whether you’re a big-shot salary-earner or a student new to navigating your finances.

You can save money in Nigeria by creating a realistic savings budget and setting financial goals. You can also build an emergency fund, automate your savings, save in stable currencies, reduce your expenses, automate your bills and try envelope budgeting.

In this article, we’ll discuss 12 of the best ways to save money in Nigeria and share a step-by-step savings guide for beginners. We’ll also answer essential questions about saving and explore some practical (but handy) money-saving tips from Odunayo Eweniyi, co-founder and COO of PiggyVest. Let’s dive right in!

1. Set realistic financial goals

Defining your financial goals can help you save money and motivate you to keep going. We recommend setting clear savings, investment and earning goals — but remember to be practical.

Don’t go overboard!

2. Build an emergency fund

Your emergency fund should contain at least three to six months of living expenses. To start, you can use the Flex Naira feature on PiggyVest and earn up to 8% interest per annum on your savings.

Remember that these funds are life savers, and you should work on building one as soon as you have an income.

3. Create a realistic savings budget

Start by tracking your income and expenses to determine how much you can save. Then, create a budget that covers all your essential expenses and leaves room for savings. You can learn more about how this works by reading our article on creating a simple budget.

4. Automate your savings

Automating your savings is a game-changer and a great way to build a sustainable savings habit without stress — especially if you’re having trouble with your expenses. You can automate your savings by linking your salary account to your savings account or by using the Piggybank feature on PiggyVest.

We recommend the latter since you can earn up to 10% interest per annum, all while enjoying the ease and security PiggyVest provides. Oh, and there’s also quick manual savings for when you want to save on the go!

5. Automate your bills

Just like you do with your savings, you can also automate your bills. This will help you stay on top of your finances and avoid unnecessary expenses. It can also help you avoid late fees and penalties that could lead to more expenses.

Automating payments also helps you budget more effectively since you’ll know when and how much you need to pay. You can tie your Pocket debit card (or any card) to recurring payments like Netflix and your HMO.

6. Record and reduce your expenses

Creating a realistic savings budget is an excellent way to save money in Nigeria, but you — and your funds — won’t go very far if you do not learn to reduce your expenses. To do this, we recommend removing non-essentials and opting for cheaper options where you can.

For example, you can plan your meals and eat at home instead of ordering food daily. You can also find and use discounts (or haggle as often and as hard as possible when shopping for groceries).

Yes, we’re saying you should be an alaroro!

Still, this tip is only as effective as your records. In essence, only you can determine what qualifies as a frivolous expense and whether reducing or removing it is possible. Our advice? Track and record your expenses! This way, you can get valuable insights into your spending pattern and see what needs to go.

Fortunately, Pocket by PiggyVest has a handy transaction history feature that you can use to track all kinds of payments – including card purchases. Of course, you can also use a jotter, your notes app or a spreadsheet (efiwe!) if you don’t have a Pocket account (why don’t you have one??).

7. Try envelope budgeting

Envelope budgeting means allocating cash into “envelopes” for specific spending categories like groceries, entertainment and transportation. It’s like an allowance for every aspect of your life and a great way to get your finances in order.

You can start envelope budgeting today using regular cash envelopes or the label feature on PiggyVest!

Here’s how to do it:

1. Log in to your PiggyVest account.
2. Click on the “Savings” button.
3. Select “Flex Naira”.
4. Tap “Try Labels.”

Now, you’re in control!

8. Increase your income

Learning profitable skills like software engineering and digital marketing can help you land higher-paying jobs, which can result in extra money for your savings. You can also use the internet to make money, take advantage of social media like Salem King or explore low-cost businesses.

9. Try a spending freeze

For a set period, stay away from non-essential spending. Yep. No pizza, akara, ice cream, bags, shoes or whatever else you know you spend way too much money on. This simple exercise can help you identify unnecessary expenses and build better spending habits.

You can try a spending freeze for a day, a week or even a month. Just start small and work your way up!

10. Treat extra income wisely

When you receive windfalls or bonuses, always allocate a portion to savings rather than splurging on luxuries. It doesn’t even have to be a lot. For example, you can set aside 10% of every extra cash you get outside your salary.

This small act can help you keep your financial progress on track.

11. Buy quality items and in bulk

Quality items may initially cost more but will help you save money in the long run. For example, while buying a new pair of jeans might be expensive, it’ll likely last longer than used ones — even if it’s a first-grade okrika.

Buying in bulk is another great way to save money. With this, you can save on costs per unit and avoid the hard-hitting effects of inflation for a while.

12. Save in a stable currency

Given Nigeria’s economic volatility, consider holding some of your savings in a stable foreign currency — like the United States Dollar — to protect your money from rapid devaluation.Need help figuring out how to get started? Then, try our Flex Dollar feature. It’s a sure way to preserve your savings in Nigeria, and you can enjoy up to 7% per annum interest rate just for saving.

How to start saving money

The saving methods we shared above are amazing. Still, we understand you might need a definitive guide to getting started — especially if you’re a beginner saver or working on your consistency. That’s okay. We gotcha!

Here’s how to start saving money in Nigeria:

1. Choose an actionable and achievable goal. You can save towards big things like a new house or your child’s education or small milestones like a new pair of jeans. However, we recommend putting some money aside for your emergency savings if you’re struggling with a savings goal.
2. Create and review your budget. Budgeting can do wonders for your finances, especially if you apply the 50/30/20 rule (where you allocate 50% of your income to your needs, 30% to your wants and 20% to your savings). You can also save more or less — it’s up to you!
3. Determine how long it’ll take for you to reach your goal. A financial goal is terrific, but you won’t go far without a solid plan. Decide precisely how much you can keep aside (based on your budget), how often you’d like to save and how long it’ll take to reach your goal.
4. Open a separate savings account. This account will serve as your kolo and hold all the money you plan on saving for as long as possible. You can also simplify this step using a safe and secure savings app like PiggyVest.
5. Start saving. Put some money into your savings account (or PiggyVest app). We recommend using the Target Savings option on PiggyVest if your goal isn’t to build an emergency fund. Remember to stick to the plan you created for the best results.
6. Automate your savings. Manual savings can be cumbersome, so it’s best to set up an automatic payment system for your funds. PiggyVest’s piggybank feature is the best way to do this. With Piggybank, you can set up strict daily, weekly or monthly automatic savings (and earn up to 10% per annum while at it).
7. Monitor your savings and review your financial plans. It’s essential to track your progress as you save money. We recommend analysing your income, optimising your spending and tweaking your savings to ensure you’re on track to achieving your goals!

It’s that easy!

Remember that there’s no such thing as too little savings — it’s better to put aside ₦20,000 out of a ₦300,000 salary for six months than not save at all. It’s also vital to save proportionally to your income.

Where should you save money first?

If you’re new to saving, you should first save money in your emergency fund. An emergency fund is your financial war chest or safety net to help provide peace of mind (and money) during mild or extreme sapa.

This fund should cover three to six months of living expenses, but it might take up to a year to grow.

What is the best age to start saving money?

While there’s no definitive answer to this question, many experts agree that building a savings culture in your early 20s can place you ahead in life (and help you make the most of compound interest as well as decades of income).

However, you can also save money if you’re in the 30+ gang. In fact, you can still get your finances in order if you’re in your 90s.

Let’s just say that the best age to start saving money is whatever age you are right now!

What is the 30-day rule for saving money?

The 30-day savings rule is a handy way to curb impulsive spending by encouraging thoughtful and deliberate financial decisions. It’s a pretty effective personal finance strategy if you have issues minimising your expenses.

Here’s how you can apply the 30-day rule for saving money:

1. Identify the item or service you want to buy. This can be anything from a new watch to a clothing item — or even a professional course. Just note it down in your notes app or on a sheet of paper.
2. Check if it’s a non-essential purchase. The 30-day savings rule is to stop frivolous spending, so you don’t need to use it in all situations. In fact, the best way to know if it’s safe to apply the rule to any expense is to ask yourself, “Will waiting to make this purchase cause harm to me, my health or my lifestyle?”
3. Wait for 30 days. This waiting period might seem unconventional, but it can help you decide if the purchase is worth the hassle (or the funds!). You can set a reminder on your phone to let you know when it’s time to move to the next step.
4. Consider the purchase. Take some time to reflect on why you want to make the purchase and the benefits it could bring. You should also decide if buying the item will affect your short-term financial goals or lead to debt.
5. Buy the item — or don’t. You can make the purchase after the 30-day waiting period if you still feel it’s worth it. Many people find that the item they initially wanted no longer holds the same appeal or importance. That might also be your experience.

When applying it to your purchases, you can also tweak the 30-day rule to align with your goals. For example, you could wait for seven days instead of a month. However, this short waiting period might be less effective than the original timeline.

Still, it’s important to remember this rule is only helpful for wants and other non-essential expenses. For essentials like bills and groceries, we recommend buying them as soon as possible.

Is it better to save or invest money?

The decision to save or invest money is personal. The correct answer to the question depends on your financial goals, risk tolerance and current financial situation.

Still, we must clarify one small thing. Saving is suitable for short-term needs and building an emergency fund, while investing is better for long-term goals like retirement and wealth accumulation. In other words, you don’t have to think of saving and investing as opposites — they’re more like twins that (if applied correctly) can help you break into financial freedom and generational wealth.

Want our advice? Build your savings (especially your emergency funds) first. Afterwards, you can invest in low to medium-risk opportunities like the ones we offer on Investify!

Practical tips for saving money in Nigeria

Odunayo Eweniyi is a founder, investor, operator and one of the most recognisable faces in Nigeria’s fintech space. She’s also the COO and co-founder of Piggytech — the parent company to PiggyVest, Pocket and Patronize. That’s why we asked her to share real-life advice about handling your finances as a Nigerian.

Here are some tips for saving money in Nigeria, courtesy of Odun:

• Set goals. Identify what you are saving for — whether it’s an item, investment or an emergency fund.
• Seek professional advice. Consider consulting with a financial advisor if you need help with the best savings and investment strategies for your specific goals.
• Automate your savings. Have a portion of your allowance automatically transferred to a separate savings account.
• Educate yourself. Learn about personal finance and investment options to make informed decisions about where to put your savings to help it grow over time. This will help you avoid Ponzi schemes and other mistakes that could destroy your finances.
• Cut expenses. Identify areas where you can reduce spending.
• Be consistent. Saving money is a long-term endeavour, so stay committed to your savings plan even when faced with challenges or setbacks.
• Avoid debt. Minimise or eliminate all kinds of debt — especially high-interest debts — as they can hinder your ability to save.

Want some more money-related advice from Odun? You can ask her! The Money Matters by PiggyVest newsletter features a new column where Odun Eweniyi answers your finance-related questions.

Subscribe for free today and ask as many questions as you like!

Final thoughts

If there’s one thing we’ve learnt from helping millions of Nigerians achieve their financial goals, it’s that saving money is a marathon — not a sprint. Therefore, you’ll need consistency, discipline and patience to start and finish the journey. Still, there’s good news: saving your way to the top is possible if you use the right tips and apply the correct tricks (like the ones in this article!).

Ready to get started? Try PiggyVest! It’s free and comes with five savings plans — perfect for Nigerians of all ages.