Analysis: KALEMBWE SAKUBITA
WHEN it comes to saving money certain people are better at the task than others.
Some individuals have a great understanding of the need to save money and how to implement strategies to ensure their savings are constantly growing. Other people may try, often unsuccessfully to adequately pad their savings accounts. The remainder of the population simply does not bother, either due to lack of knowledge or lack of funds. Fortunately, you have the ability to save money and by recognising the common reasons you fail, you can avoid mistakes that lead to inadequate savings as you age.
You could be failing to save because you are an impulsive buyer. Sales promotions can affect your buying decisions and sometimes lead you to ignore your budgeting plans. You may not be aware that a lot of purchases that you make are actually for things that are not really needed. You are spending more on wants and this makes you fail to save.
Apart from binge spending what else actually stops you from saving money? Here are a few reasons why you fail to save:
You may not be able to save because of not having enough money. By far the most common reason people give for not saving money is not having extra money to save. In most cases this is not the fact but an easy excuse for not investing the time, energy and discipline required to find the extra money you have in your budget. Starting and growing your savings often requires avoiding spending, which is the real issue preventing many consumers from saving money.
Not having enough to save is the most common reason you give, but not having enough to save is not the real issue. You usually do not have enough because you spend too much money. In fact, it is highly likely that you spend more than you earn. To let your savings accounts grow means that you will have to leave that money in the bank and not spend it. One thing you should remember though is that it is doable. Leave your money alone and let it accumulate interest over the years. You will not regret your decision to save.
Another is that of not starting early. Not starting early in life is a stumbling block to saving – Each day that passes without saving money is a lost opportunity to increase our savings. By starting early, we increase the number of years we have to contribute to our savings as well as the opportunity to benefit from earned interest or growth in investments. Remember the power of interest.
Saving money should be part of your values even at an early age because the earlier you start saving, the more money is saved in your bank account. Children should learn how to save money at an early age so they can be educated about finances. Teaching children to save money will help them develop lifelong money management skills. You can jump-start your child’s financial success by opening a Future account for them.
You may also find it difficult to save because of failure to eliminate debt. A person who carries high interest debt will have a much harder time saving money than a person who carries little or no debt. Debt is one of the very real reasons people do not have money to invest in savings. Eliminating debt is one of the fastest ways to free up “enough” money to contribute toward savings.
After getting your salary, you usually spend on a number of things that you do not actually need. Prioritising what needs to be paid first would definitely stop you from spending on unnecessary things. Prioritising would also keep your bills from piling up. This is something that you would want to avoid. Paying three or even five months’ worth of bills is hard. Something that should have been affordable in the first place turns into a big bill just because you do not know how to prioritise.
Further, you find it difficult to save because of not budgeting. Not making your monthly budget is one major cause of overspending leading you to not saving a dime. Budgeting provides a plan where you can easily see what needs to be paid first and what will be left to spend on other things. By budgeting, you sometimes come to the realisation that there were quite a few things bought last month or last payday that are not actually needed or could be minimised on. That realisation is enough to help you start cost-cutting measures that will allow you to have enough to save.
In addition to all the above reasons, not paying up your debt in time is another reason you fail to save. If you have a lot of debt and not keeping current with your payments, you get more interest fees and owe more than you did in the first place. Having to pay debt for a very long time makes saving money barely possible. Stop this vicious cycle by paying your bills on time or making payment arrangements if necessary and start saving.
The author is FNB Zambia consumer educator.