IMPORTANCE OF A SAVINGS CULTURE

There is never going to be enough money to save. That is what you must first accept if you want to develop the habit of saving. A salary increase for most people will not necessarily get them to save more. Your children finishing school will not get you to save more. A bigger client for your business will not get you to save more. Getting older will not enable you to save more. Paying off your mortgage and other debts will not get you to save more. All these are excuses not to start saving today. If you are not saving with what you have today, chances are you will not save when you have more money. Simply because you do not have a culture of saving. One of the definitions I found describes culture, as a way of thinking, behaving or working that exists in a society or organisation. In my own words – something done consistently becomes a habit; a habit done over and over becomes a way of life i.e. a culture. If we look at our society, we have a spending culture as opposed to a savings culture. This is why most often a bigger salary means more spending even though we often delude ourselves into thinking we will invest or save more when a higher income comes along. Trust me, the world is never going to run out of things you can buy. You may think you have the latest phone, and a month later another model or upgraded version of your phone will be there.

So what is the importance of the habit and consequently the culture of saving? Firstly it helps remove the scarcity mentality. Most people do not save because they think they do not have enough money to save. So they are consistently in the frame of mind of “there is not enough”. A writer by the name of Eckhart Tolle stated, “If the thought of lack has become a part of who you think you are, you will experience lack and all you will see is lack”. If you actually believe today with what you are earning, that it is not enough, it will never be enough because you are focused on the wrong thing. To put this into practice just start saving. Nothing is too small to start with. Work with the Kes 5,000 you have (or whatever you have available) and don’t procrastinate with the Kes 500,000 you hope to have one day. Do not wait to feel you can afford to save – just do it. After taking this leap of faith you will discover you did not die because you saved. The things that are important went on – rent was paid, you covered your transport costs, you ate food etc. This is the start of instilling confidence that you can do it and you will then find it easier to start increasing the amounts. If you have struggled with saving, you are better off starting with a small consistent amount and building on it rather than a large amount which you give up on in a month.

This leads to another important reason to develop this savings culture. It is the doorway to wealth creation. Remember you cannot create wealth if you are constantly thinking “there is never enough”. I have met very many people who want to know where to invest but they have never cultivated the discipline of putting money aside. Many of them are using not knowing where to invest as an excuse not to save. You do not have to know precisely where to invest before you start saving. When you consistently save your Kes 5,000 even in something as straight forward as a savings account, you are more likely to start picking up ways and information about how best to utilize your Kes 5,000 monthly saving. Preparation meets opportunity. Once you know you have money accumulating your mind will start looking out for information. A conversation with someone may spark off a business idea. The share report in the daily papers may start becoming interesting to you and you will go out of your way to understand it. You may be motivated to team up with other people so you do bigger investments. Once you start seeing what you are actually able to do with this Kes 5,000 you get the incentive to keep increasing it.

A culture of saving tames the beast called “instant gratification” because you start to understand the value of money. For example, if you put Kes 5,000 every month into accumulating a particular share on the stock market, you keep track of information regarding that share and observe its performance, chances are you will not often spend Kes 5,000 without thinking about it and the opportunity cost. If you do decide to spend, you are aware of the choice you have made. You are able to put aside this instant gratification and use money as a resource to live the life you really want. Last week I wrote an article on identifying values and living your life in line with those personal values. This savings culture allows you to put things into perspective. Is upgrading your car on debt today, more important than being able to do the things that have value to you? Last but not last, if we develop a savings culture, our children do the same and their children do the same. This culture has a positive effect on not just you but generations to come. It is an extremely important legacy you can leave. Children will do what they observe and if you have a spending culture in your family i.e. more emphasis is placed on how to spend money then that is probably what they will do and teach their children to do. Given that the critical subject of money is not taught through formal education, consider yourself and your actions to be the school for your child. Ask yourself what you are teaching them? Perhaps it is time to change the lesson.

Waceke runs a program on personal financial management.

Find her at waceke@centonomy.com

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