One of the most expensive things adults spend their income on is rent, so it just makes sense to figure out how exactly to go about saving and then paying your rent. If you live in Nigeria, you know one thing you never want to face is an embarrassment from your landlord or even worse, being asked to move out and losing the place you call home due to the inability to pay up the rent. In this article, we’ll be discussing saving up for rent.
Sometimes the hardest thing about saving money is just getting started. It is not where to save. It is about starting to save and then continuing to save through thick and thin until your target is reached.
According to research, over 50% of Nigerians in the urban parts of the country live in rented apartments. Unlike most cities around the world, rent in Nigeria is mostly paid upfront annually and this only has led to many people being unable to pay up at the due date. Not that they didn’t make the money to pay the rent that year but because they believe “if I don’t get it this month, there’s always next month” until it gets too late and they get kicked out. The toughest month for Nigerians who pay annual rent is the month when rent is due for payment. We’ve all been there at different points in time.
So why continue with this lifestyle of risking being evicted?
It’s a big misunderstanding to think that if you make a ton of money each month then you are on the safe side. While earning a lot of money helps, what will help you, even more, to live better is to have some positive saving habits. We know saving towards your rent can be a bit challenging but it is achievable.
See how it can be done:
1. By keeping track of your expenses
This is not difficult. You may keep track of your costs in several ways. Regularly tracking your expenditures can help you see where your money goes and plan where you’d like it to go instead. Many overpaid people appear underpaid due to financial mismanagement. This is why budgeting is important for your financial well-being; it allows you to understand how you spend your money and how you distribute your earnings among various activities. Keeping track of your income and expenses will help you to be more disciplined.
2. Finding ways you can cut your spending
Your budget should outline how your expenses measure up to your income so you can plan your spending and limit overspending. If your expenses are so high that you can’t save as much as you’d like, you should try and cut back.
Eliminate the unnecessary expenses and try to find cheaper alternatives to the primary expenses such as: DSTV packages, Netflix and other subscriptions, Mobile and WIFI operator, Electricity usage and Transportation.
You can also eliminate unproductive charges such as the ATM withdrawal fee on your debit card.
3. Decide on your priorities
After your expenses and income, your goals are likely to have the biggest impact on how you allocate your savings. Prioritizing your saving goal gives you a clear idea of where to start saving. Let’s say you are looking to relocate to a new apartment shortly, in a different part of town where most likely, the rent is higher compared to your current apartment. You can start putting money away now.
4. Defining a savings goal
In this case, the goal is your rent. The rule of thumb in personal finance is to spend between 25 and 30 per cent of annual income on rent. So for example, if you make ₦5,000,000 annual income, your annual house rent should range between ₦1,250,000 to ₦1,500,000. This means if you keep tucking ₦170,000 into some back wallet monthly, you can easily save up for your annual rent in just 7 – 9 months. This is easier said than done right? We know, but it is doable.
5. Make use of saving apps
There are free apps like Cowrywise, Piggyvest, and some others that allow you to have automated savings that help you automate your periodic savings. You specify a date and these apps will automatically save an amount away from your bank account into that account.
What are some other tips you have that could help someone save up their annual rent? Let us know in the comments.