The Stories

THE NEED FOR SAVINGS AND ITS IMPORTANCE.

Savings can be used as a tool for human development. In most African countries, high inflation combined with low incomes don’t allow many people to make savings out of surplus funds. Few families in Africa belief that their income is adequate, especially when there are five or six people in a home with so many financial commitments to meet. It seems that financial obligations always outweighs our income levels. What then can the poor, the low, and the middle income earners do when it comes to the question of human development? If money is the most important material, then how would they build financial security?  Financial security means the ability to access funds during normal or emergency periods. Without financial security, people live in constant fear.

Nature can also provoke fear because it does not discriminate against the poor or the rich, the tall or the short, the black or the white, the young or the old. One will fall sick when the time comes; accidents or even death can occur to anybody without prior notice. Indeed any misfortune can occur at any time. People need to prepare for these eventualities whether one is rich or poor.

More than just prepare for emergencies, we need to plan and cause a gradual development of our lives. Of course, these preparations for a better future calls to access to funds that are sometimes not easy to accumulate. Accumulating funds requires discipline, self-control and a high degree of sacrifice. However, there is a way of facing our challenges and getting things done. We have so many alternatives to select from. Those who can meet the minimum savings requirements of banks may choose to save with them, but how many of us in Africa can meet those requirements of big banks?

Some years back, the Government of Ghana found out that people were keeping all their monies outside of the main financial system. This prompted the Government to set up policies that will compel, all cocoa farmers as well as public salary earners, to be paid through the banking system. This meant that such people had to open an account with one of the approve banks. The Government thought that this policy would encourage people to save because they assumed all these people will have a certain amount of their incomes in their accounts and keep on adding overtime. In reality, this idea did not work well because people either thought their incomes were very low or their habit of savings was not strong.

We are all aware that income levels are very low, that the cost of living is very high and that responsibilities are many. Even an economist will argue that during periods of high inflation it is not advisable to save. All these are genuine excuses for not saving, but they do not exempt or prevent you from the problems, challenges and developmental gabs ahead. Whether we like it or not, by all means one has to face these realities. We can either prepare ourselves for the future or we will be taken unawares by events for the better or worse.

Again, many of us think savings are to be out of surplus money; that is, money left over after our needs and wants have been met. If savings is understood in this way, then surely there are few people who can ever find a way to save. Even the wealthy would not save if this were not true because in most cases, the higher one’s income, the higher one’s expenditure. There are also many among the low and middle income groups who spend as soon as they get it. In all cases, these people spend money without first setting their priorities.

The Holy Bible even spoke about savings in Proverbs 6:6, when it says: “The lazy, go to the ant, consider its ways and be wise. It gathers food in small bits and stores them during the dry season (summer) as preparation for the rain season (winter)”. During the rainy season, the ant covers its hole and depends on the food that it has stored until the next dry season. Through savings, ants are able to prepare for the future and live much longer. When it comes to the human world, especially in Africa, we are often not satisfied with the little money that we are getting, so we tend to live from hand to mouth and try to provide for what we need today, forgetting about tomorrow. Salary earners sometimes even spend the next month’s salary in advance before they are even paid. 

It is easy to misinterpret the Bible by saying: “Don’t think about tomorrow; tomorrow will think about itself”. This is the easiest excuse people can give for not being able to save. They believe that God will always provide. This belief may be true but you have to make some efforts as well.

The Bible is actually saying that if you have something, no matter how small, that you can depend on, then try to prepare for tomorrow. However, when there is no hope at all of getting anything to feed on, don’t think about tomorrow for God will by all means provide you with food.

From my experience, I’ve seen those who develop the habit of savings, whether in a country with high inflation or not, are better off and often more prepared than those who do not save. Excuses don’t actually exist, but the reality does. Finding excuses won’t help because you will definitely face future realities and you must prepare for that.

Savings means denying oneself something now, making a sacrifice now, or postponing immediate gratification and satisfaction to enable one to put aside money which will be of more benefit later. Savings also means you must have the interest, the willingness and the ability to minimize your consumption (expenditure) habits in order to set aside a fractional part of your income for future development. When sayings is understood in this sense, then it is nearly always possible for most people to make some small savings regularly. Start small and allow it to grow over the years. 

Little drops of water makes a mighty ocean.

The question of how much to save will vary from one person to the other. According to my experience as a credit union advisor, the amount to be saved will depend on one’s purpose in life. A purpose in life creates incentive and motivation for savings. Determining what one wants to achieve, how to do it and when, can encourage one to give up some things of immediate minor satisfaction and put aside money regularly in order to achieve one’s goals in life.

Developing the habit of savings is the key to human development because it builds confidence, assists us to build capital, and create financial security for unwanted situations. Savings allow us to develop ourselves to meet future challenges. Although a great sacrifice, saving for people in Africa is essential for development.

At one of my credit union meetings in Cape Coast, Ghana, a lady explained how she and her husband turned around their fortune from poverty level to middle-income earners. It happened that bot husband and wife had a problem coping with their monthly income because they faced so many challenges like the payment of school fees, rent, clothing, etc. The husband eventually had to go for a loan to protect the family from losing its reputation. It them two years to repay that loan. Then one evening, the husband invited the wife to a quiet place and told her that he had discovered something strange and wonderful that he would never had known had he not gone in for the loan. “What is it?” she asked. Her husband explained that all the previous years they had worked, their salary had never seemed enough to carry them through to the end of the month. Yet when he was forced to give almost all his salary to repay his loan for some time, he was surprised to note that things still moved normally. The children were not eating half plates of food because there was not much money left, school fees were gradually paid in full, utility bills were fully paid and other family obligations were fully met. “But what does that mean? What’s next?” asked the wife. The husband finally answered: “If we have been able to live harmoniously for the past two years while sacrificing our income to the loan, then why can’t we continue to sacrifice for a better future? I think we should open a savings account and save the exact amount of the loan repayment for development purposes.” The wife agreed to this idea and the savings grew rapidly over the next few years. From there, the wife was able to open a savings workshop that soon became a popular place in Cape Coast. In admission to this new business, the husband and wife managed to put up a guesthouse with twelve rooms. The family income has since increased very much, and they now feel more comfortable and confident in themselves than before. This husband and wife are now very highly respected in their community

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How can the success of this family be explained? One explanation is the understanding reached between them on their desire to develop. The second is the acceptance by both of them on the need to sacrifice now and prepare to meet future challenges. The third and the most important one is the willingness to put that decision into action, move a step further, make the initiative, and start small without caring at all about how long it would take them to accomplish their goals. 

Faith without action is dead. (James 2:17); without this knowledge my people will perish (Hosea 4:6).