Saving, not earning more will secure a happy future
Jul 28, 2010
LAST week, Janat Mukwaya, the general duties minister, affirmed a well known fact; Ugandans lack a saving culture.
LAST week, Janat Mukwaya, the general duties minister, affirmed a well known fact; Ugandans lack a saving culture.
According to the statistics, the absence of a strong saving culture has placed Uganda’s household savings rate at a paltry 1.5% to the national gross domestic product and is considered the worst in the world.
Given this dismal state of affairs, what would be the best course of action at the individual and national levels to change the mindset of Ugandans?
Experts have suggested several ways in which the Government can intervene through regulations and incentives that can compel Ugandans to save, including putting in place a savings policy.
While this is critical, it’s advisable that individuals kick-start this habit as opposed to waiting for external forces that you may not have control over.
If you fall in the category of the non-savers, you could consider assessing what stops you from saving. Do you lack the financial knowledge, money or you simply do no care?
With this in mind, you can then come up with a plan on how to cultivate this new money habit. Saving and investment, in addition to the available retirement plans, is one of the critical initiatives of securing your financial future.
Unfortunately, a good number of people cite failure to make ends meet as an excuse for not saving.
They bank on false hope that with more income, they will eventually begin to save.
It is wrong to assume that making more money will solve your financial problems. Unless you learn how to handle what you earn, you will not make a difference regarding your financial situation.
For starters, saving money shouldn’t only be looked at in the context of periodically putting specific amounts aside.
It should entail controlling the amount of money you spend by making wise choices. Consider tracking what you spent in the past and projecting what you hope to spend in the future.
Try and stick to this spending plan and also figure out what excesses need to be weeded out. This way, you can try to spend less than you earn, leaving some amounts for saving and investing.
However, in some cases, you will need to increase your income streams to have a fair amount left to save and invest.
Another important thing to consider is shopping smart through carrying out research about the best bargains, prices or sales.
If you are critical about how you put your money to use, then you can cultivate the discipline of setting aside some amounts to save and invest.
Crucially, you could consider shedding some habits that characterise poor money management. If you don’t file your bills, expenditure lists and income records, you should start.
If you pay bills late, spend more than you earn or don’t have specific household spending plans and high consumer debt, then you are guilty of poor money habits.
Once you get this sorted, you can start with having short or long-term goals.
Then, put aside a figure that suits your current financial situation.
You can start with anywhere from sh1,000 per day as a means of trying to get into the saving habit. Look at each shilling you set aside as an employee that will work for you in future.
More importantly, these low amounts can be scaled up as your level of financial discipline improves. Once this amount accumulates, it can be banked on a high interest yielding account or invested in any asset class.
But rather than struggle with setting this amount aside, it’s advisable to automatically deduct this saving from your income before it lands on your account. That is a more practical approach for the uninitiated.
The important point to note is that we are living in an environment in which we are spoilt for choice when it comes to savings and investment options that include fixed deposits, specialised interest accounts, shares, government securities, real estate, and businesses, among others.
Take time to analyse each option, the risk factor and returns on investment.
However, the major limitation could be your current level of finances, knowledge and skills required to make the right financial decisions.
If you are just starting out, it may be wise to seek financial counsel and read a lot to change your money mindset before you make decisions.
Remember, the choices you make will ultimately impact, not only on your future, but that of your household.
According to the statistics, the absence of a strong saving culture has placed Uganda’s household savings rate at a paltry 1.5% to the national gross domestic product and is considered the worst in the world.
Given this dismal state of affairs, what would be the best course of action at the individual and national levels to change the mindset of Ugandans?
Experts have suggested several ways in which the Government can intervene through regulations and incentives that can compel Ugandans to save, including putting in place a savings policy.
While this is critical, it’s advisable that individuals kick-start this habit as opposed to waiting for external forces that you may not have control over.
If you fall in the category of the non-savers, you could consider assessing what stops you from saving. Do you lack the financial knowledge, money or you simply do no care?
With this in mind, you can then come up with a plan on how to cultivate this new money habit. Saving and investment, in addition to the available retirement plans, is one of the critical initiatives of securing your financial future.
Unfortunately, a good number of people cite failure to make ends meet as an excuse for not saving.
They bank on false hope that with more income, they will eventually begin to save.
It is wrong to assume that making more money will solve your financial problems. Unless you learn how to handle what you earn, you will not make a difference regarding your financial situation.
For starters, saving money shouldn’t only be looked at in the context of periodically putting specific amounts aside.
It should entail controlling the amount of money you spend by making wise choices. Consider tracking what you spent in the past and projecting what you hope to spend in the future.
Try and stick to this spending plan and also figure out what excesses need to be weeded out. This way, you can try to spend less than you earn, leaving some amounts for saving and investing.
However, in some cases, you will need to increase your income streams to have a fair amount left to save and invest.
Another important thing to consider is shopping smart through carrying out research about the best bargains, prices or sales.
If you are critical about how you put your money to use, then you can cultivate the discipline of setting aside some amounts to save and invest.
Crucially, you could consider shedding some habits that characterise poor money management. If you don’t file your bills, expenditure lists and income records, you should start.
If you pay bills late, spend more than you earn or don’t have specific household spending plans and high consumer debt, then you are guilty of poor money habits.
Once you get this sorted, you can start with having short or long-term goals.
Then, put aside a figure that suits your current financial situation.
You can start with anywhere from sh1,000 per day as a means of trying to get into the saving habit. Look at each shilling you set aside as an employee that will work for you in future.
More importantly, these low amounts can be scaled up as your level of financial discipline improves. Once this amount accumulates, it can be banked on a high interest yielding account or invested in any asset class.
But rather than struggle with setting this amount aside, it’s advisable to automatically deduct this saving from your income before it lands on your account. That is a more practical approach for the uninitiated.
The important point to note is that we are living in an environment in which we are spoilt for choice when it comes to savings and investment options that include fixed deposits, specialised interest accounts, shares, government securities, real estate, and businesses, among others.
Take time to analyse each option, the risk factor and returns on investment.
However, the major limitation could be your current level of finances, knowledge and skills required to make the right financial decisions.
If you are just starting out, it may be wise to seek financial counsel and read a lot to change your money mindset before you make decisions.
Remember, the choices you make will ultimately impact, not only on your future, but that of your household.