Why are you saving?
Why are you saving?
What you need to know:
- According to a new report by Be Money Wiser, it is likely that a number of Ugandans save without purpose.
One of the best ways to take charge of your finances is to accumulate healthy savings habits.
But most people find that while they have money for whatever they need, there is just not enough for saving. In these uncertain economic times, you might also be wondering when to start saving.
Without a proper savings culture, you can not save for a specific purpose. This shows how much you should entrench the savings culture in your lifestyle as early as possible.
Uganda still has a low saving culture but savings have been growing, increasing from Shs4 trillion in 2011 to Shs20 trillion as of June 2022. Saving is a culture you should adopt, whether you are rich or poor. In simple terms, learn how to build a personal savings plan — all to support short, medium — and long-term saving goals; whether that is saving for a first home, holiday or to generate income at retirement.
Why is it important for me to save? The simple answer is that saving has never been a respecter of what you earn. But how do you actually save with a goal or purpose?
There are situations where the final patent of the money has no alignment. This means that despite saving about Shs5 million, if an emergency comes up, you divert the money; which implies that you were saving without a purpose.
This is inevitable but have you ever thought of having different saving jars such as piggy bank or saving boxes to help you save with a purpose; take for instance for personal care i.e. hair, entertainment and vacation / holiday?
Jonathan Kamoga who works within the media fraternity and an adventure lover says that the only way he is able to cater for his travel and holiday is by setting up a jar that will help him enjoy a getaway trip.
Kamoga in his twenties says that entertainment and adventure are fun filled activities that he saves money for; which he does on a monthly basis through either sending the money to the organizers or having different jars to avoid diverting the money he gets from his side hustles.
“I do not travel for holiday trips because I have the money. All I do is set up a savings jar purposely for holidays. This helps me cater for expenses during those holidays; which means that I do not need to get out all my finances at once for a holiday which leaves me with nothing,” Kamoga says.
According to a new report by Be Money Wiser, it is likely that a number of Ugandans save without purpose meaning they are saving blindly.
The new study by the social enterprise institution seeking to create a financially, knowledgeable, disciplined and prosperous society, in its report titled: ‘Saving with piggy and eggy banks for sustainable financial health and financial inclusion,’ reveals that most of the money Ugandans keep aside for the rainy day is spent on starting a small business, school fees and buying school requirements.
To top the list of what Ugandans save for, according to Be Money Wiser which conducted the study includes; basic needs, upkeep of children, pay off a loan, household appliances, home use, uncertainty and functions and buying a dream phone.
The report further indicates dominance of children’s needs such as school fees and school requirements on the earnings currently being eroded by inflation.
So what is your money mindset or why are you saving?
Whereas the report indicates that the pressure emanating from the aforementioned demands is “good” in as far as compelling parents/guardians in embracing some sort of saving culture; the shocking aspect documented in the report’s findings is that a considerable number of Ugandans save without a purpose—save blindly.
“However, some respondentsdid not have a clear saving goal or with responses like ‘unclear savings goal.’ This finding is an indication that as much as saving with a goal should be an outcome, some beneficiaries are yet to grasp saving with a purpose,” reads the report in part.
The managing director, BeMW, Mr Peter Ntumwa, noted that saving using the piggy and eggy banks is a mandatory financial literacy approach given that children and any person regarded with an inadequate savings habit can benefit from the approach.
“Seven out of 10 people save daily, indicating that saving jars provide a saving solution for daily income earners majorly,” he said adding that people who use either piggy or eggy banks and saving boxes as saving jars concur that their savings discipline has improved with the use of saving jars (Eggy and Piggy banks), a sign that this model can be adopted to reach a wider population.
Through heightened awareness, financial institutions can use the piggy and eggy banks to improve savings on bank accounts and loan repayments especially by daily income earners.
The Financial Capability Survey 2020 shows that a large number of Ugandans save informally.
The financial capability survey indicates that only 15 percent of Ugandans save their money in deposit-taking financial institutions regulated by the Bank of Uganda, while 17 percent save on their phones using mobile money.
The findings also indicated that up to 44 percent of Ugandans rely on village savings and loans associations while 42 percent rely on savings boxes at home.
The saving culture among Ugandans has improved over the years with a number of them opting for informal methods like saving boxes among others. However, according to the Deputy Governor of Bank of Uganda Ating-Ego, savings are being wiped out by double digit inflation which has hit 10.7 percent in October up from 10 percent in September.
Ugandans spend the highest percentage of their income on food, which eats into their savings. Food crop inflation for September was at 21.6 percent – the highest contributor to the inflation basket.
Saving with a purpose
One of the saving jars can also be thorough insurance. Insurance can be used as a saving and investment product that can help you plan for any insurgence.
Uganda, like many other African countries, still lags behind in terms of insurance penetration rates. Back home, industry players are trying to deepen insurance uptake by encouraging people to buy insurance policies as way of saving.