The Best Way To Save Money

First, this is not to say other ways are bad. In fact, this post is to share what I consider is the best of all the good ways to save money.

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The best way to save money is to make money. Depending on your stage and status, responsibility-wise especially, you will definitely need to have money saved for uses like your children's education, mortgage or home rent, family emergencies, living expense and maybe your own continuous education. There is no justification for not having such savings. But once you've done that or as you are doing that, you need to also grow your wealth. And the best way to grow your wealth is not by saving.

No billionaire saved his way to wealth. And except you earn over N2 million per month, you can't conveniently save to become a millionaire. Then on top of that you face big risks. Ask those in Zimbabwe what happened to their savings when their currency started losing value and they needed billions of Zimbabwean dollars to buy common bread. That might be a little extreme but currently in Nigeria, what you could buy (except for laptops and phones) for N1 million 10 years ago will probably cost you over N5 million this year. A parcel of land that costs N2 million in 1999 will now likely cost N25 million today. N5 million worth of imported goods for sale in your shop 10 years ago will now cost over N20 million for same goods today. 

Every year, as our currency loses value and price of goods increase, you are losing the value on the money you put in the bank. That is why you can't build wealth by saving in the bank. You are only meant to save towards specific goals: emergency funds, family living allowance, education fund, annuity, pension, mortgage and car purchase. Saving isn't designed to make you rich and it won't.

To make wealth you need to make money. You need to grow your money making skills. Increase your earning potential, start a business, invest in businesses and create something of value that you can sell (could be a book, or training video or art work). Those are the ways people make money. And your only way if you don't earn mega bucks per month or play lottery.

Think of all the rags to riches stories you've heard or seen. How many of them achieved it by saving the little they had in their rage stage rather than putting themselves out there for increased opportunities to make money? Think of all the super rich people you know. How many of them have their assets as a huge pile of money sitting in a bank account? Even Dangote's billions is the part of his ownership of the Dangote Group. Not some money in a fixed deposit account. And it's same with Bill Gates, Warren Buffett and Amancio Ortega. Their source of wealth is the businesses they own. Not the bank accounts they have.

This is a case of examining reality and making an informed choice. There will always be exceptions in life. There might be that guy you know who works in Nigerian Customs and is a millionaire. There will be someone else who looked like he saved to wealth. But consider your chances. If you want to become a pilot, will you do a self-study approach just because you read the stories of people who taught themselves how to fly a plane and that even the inventors of the airplane were self-taught? You clearly know that your chances will be slim compared to if you go to a proper formal education system to learn airplane flying. And it's same with making wealth. Even the dumbest wealthy man made it via investing in businesses while the super smart are working extremely hard for every Naira they get. So if making money ranks high on your life plan, then you need to take the approach that is working for almost all the rich and wealthy. Don't save money, make money.