A bitter truth: We Nepalis are horrible at budgeting and saving. We first spend and then we plan to save. Regardless of whether you are making a couple of thousands or hundreds of thousands, if you are not properly budgeting and saving, you will live with a financial crunch throughout your life.“Spend first save later" is the adage we Nepalis live by. It is a grim reality of our society. Any financial planner true to her profession shall strictly proscribe this practice as it invariably leads to no or miniscule returns.

We live in a country where we struggle even for basic needs, which our government is incompetent to provide, be that water, electricity or medical assistance. Just look at the recent pandemic and vaccine fiasco! Medical bills are piling up and people are taking out loans even as their body ails, which is the worst nightmare for anyone.

I understand that business people will never have cash in their hands. And the theory is that if you have a lot of hard cash, you are going wrong somewhere in investing and growing your business. There are different perspectives on investments and returns. We are not discussing that. We are rather getting into the basics of saving and how it can be done without thinking of it as rocket science.

If you listen to successful people, they have one thing in common: the willingness to sacrifice, for a future gain. It is fascinating to hear a Microsoft, Apple or Tesla starting out from a garage to a billion-dollar-company but we do not care to hear about how every penny was counted and saved. So what is the success formula for savings? Borrowing the words of Warren Buffet, the legendary investor and world’s richest man, “Don’t save what is left after spending; spend what is left after saving.” 

The magic seems to lie in savings first. It eliminates the problem of not having enough to save at the end of the month. Saving first also ensures that we are forced to budget and develop frugality in our spending. It is not about how much you earn but how much you save before you spend. It’s not so much about earning in thousands or lakhs but more about saving first and budgeting our expenses. That’s the key to saving for the future and securing our financial freedom.

But how do we start? What I have learned from American investment guru Dave Ramsay is to save $1,000 (Rs 120,000 approx) every year as an emergency fund. This fund should not be cracked open for a holiday or to buy that Michael Kor mink coat from the fall collection or that sofa set you have been eyeing for some time. This is for your medical emergencies. 

I know a lot of you are giving me big eyes as it seems like a lot of money and I bet it is. Still, I say it is not impossible. The only thing that we might have to cut down on is the money we spend eating out. For example, if you are spending Rs 200 a day while having lunch outside during office hours, you can actually carry your lunch from home. This is an unseen saving that we do everyday. The only hard work is that you have to cook your lunch before leaving for work. Even if you save Rs 100 a day, that is five days a week, making it Rs 500 per week. That makes it Rs 2,000 a month, which doesn’t seem like a big amount but when you do that for a year, you get Rs 24,000. 

If you really want to save, the biggest sacrifice is to quit smoking and drinking. At an average, a restaurant charges you Rs 550 for a bottle of beer that costs you Rs 275 in retail. Now if you really want to drink, you can drink at home. The beer will give you the same kick that it gives you at home or at the cafe.

That said, it is absolutely okay to go out for dinner once in a while. That again is after you have done your savings. We all deserve to celebrate achievements.

Let’s assume you smoke ten sticks of cigarettes a day, which will cost you Rs 145 on average. That will total to Rs 1,015 per week since you won’t take an off on the weekends. The total amount is Rs 4,350 each month, totalling to Rs 52,200 a year. You thus might be able to buy the phone you have been eyeing on just by stopping smoking.

These are just examples. There might be so many ways we can adjust to save. We just need to understand the difference between need and want. Each time you look at something, you should ask this question: Do I need it or want it?

In the end, I want to quote from George Calson’s book ‘The Richest Man of Babylon’: “The first copper you save is the seed from which your tree of wealth shall grow.”