You hear these buzzwords around often: ‘budgeting’ and ‘saving money’. But, you do realize that it’s easier said than done – especially when working in an entry-level position. There is no magical formula for getting rich overnight, and saving money is a challenging task. Without a doubt, money is a powerful tool and the paradox is you need money to have more money; in fact, higher savings can help you have more investments, and consequently a higher income.
In the MENA region, a full-time job is the main, and sometimes the only, source of income for most people. It is probably not shocking news that the average salary in the MENA region is dissatisfactory. According to tour survey, only a small proportion of respondents (four percent) claim to have high levels of satisfaction with their current salary, with salary satisfaction varying significantly based on location and industry.
Saving money is not impossible even with an entry-level job. Saving a monthly proportion of your income is doable with proactive planning and budgeting. Here are a few tips to help you save more bucks in your bank:
1. Create a personal budget
For many people, even hearing the word ‘budget’ is a panic trigger. However, personal budgeting does not need an advanced accounting degree. A personal budget can be easily created with a simple spreadsheet or even with the classical pen and paper. When creating a budget, make sure that the amounts are as accurate as possible and that the budget has clearly labeled categories for your records. Although you may scowl at this, but we recommend that you make monthly budget sheets. A yearly budget will not reflect the varying expenses over the months. With a monthly budget you can more accurately adjust your expenses to reach your savings goal.
2. Allocate for absolute necessities
When creating expense categories for your budget, you should begin by listing how much you need to pay for things like rent, utilities, taxes, transportation…etc. Basically, all the items you do not enjoy paying for, and that you have no leeway over, must be dealt with first. Many people make the mistake of paying for their essentials on-the-go. We say, when you receive your paycheck, the first thing to do is to allocate the money for your ‘musts’, put that amount aside and do not be tempted to spend it on non-essentials.
3. Allocate for flexible necessities
We call items like food, your internet connection, and clothing, flexible necessities because their amounts can vary significantly from month to month, and are based on preferences and lifestyles. Ideally, you should not spend more than 40 percent of your income on these items. Your income level will inevitably have an impact on how frequently you eat out, travel, or buy new clothes. As much as you would like to have sushi every day, make sure that spending on such items is proportionate to your income. Use the percentage feature on your spreadsheet to determine a spending limit for yourself and stick to it by revisiting your budget frequently.
4. Do not make the leftovers your savings
When you are formulating your budget sheet, designate a specific percentage of your income as savings. A realistic proportion is 10 to 15 percent of your income as savings. This amount should be calculated before you receive and begin spending your salary. One-third (35 percent) of MENA respondents claim that they do not manage to save any of their monthly salary. If you wait until you have spent most of your income and use the leftovers as savings, then most likely you will end up with too little, or nothing at all.
5. Designate a budget for emergencies
It is very critical that you designate a slice of your income for urgent matters. Things like sickness, accidents, and job dismissal are all highly unpredictable and often carry significant expenses. Do not assume that your savings are your emergency fund. Although, sometimes you may have to spend a portion of your savings on emergencies, it is highly recommended that you keep these two items separated.
6. Ask for a raise
If you believe that you are being underpaid for your talent and experience, or based on the cost of living or salary levels in your country, then you should ask for a higher salary proportionate to the company profitability and overall performance. Request a raise from your manager, but do not jump the gun without checking the industry average. This way you can have a clear understanding of the average salaries in your country for your industry, position and experience level, and therefore, ask for a realistic amount.