standing order
A standing order is an instruction to your bank to move a fixed amount on the same day every month, automatically.
In plain English
A standing order is the single most powerful tool in personal finance, and it is free, and almost nobody uses it properly.
It is an instruction to your bank. Move this amount, to this account, on this day, every month, until I say otherwise. You set it once and it happens forever.
The reason it matters so much has nothing to do with banking and everything to do with human nature. Saving what is left at the end of the month never works, because nothing is ever left. Something always arrives to absorb it.
A standing order removes the decision entirely. The money leaves on the day your salary lands, before you have seen it, before you have felt rich, before anybody has asked you for anything. You then live on what remains, and you adjust, because people always adjust.
Set one up for your investments. Set one for your rent, dividing the annual figure by twelve. Set one for school fees.
This one instruction, given once, does more for most people's finances than any investment decision they will ever make. It takes about ten minutes and it works while you are asleep, distracted and weak.
Your salary lands on the 25th. You set a standing order for the 26th moving ₦120,000 into a money market fund. You never see it, never decide about it, and never miss it. After five years there is over ₦10 million there, built by a form you filled in once.
Questions people ask
What is the difference between a standing order and a direct debit?
You control a standing order and set the amount. A direct debit lets the company pull varying amounts. Use standing orders for saving, since you stay in control.
Can I cancel it?
Yes, at any time, which is also the weakness. The strength is that stopping requires a decision, and most people cannot be bothered to make it.
When should it run?
The day after your salary lands. Pay yourself before anybody else has a chance to ask.
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