Saving can free you to make the choices you want about your life. Picture: iStock
Saving can free you to make the choices you want about your life. Picture: iStock

I was recently invited to a business conference in Swaziland at which a fellow speaker, a prominent businesswoman, got up on stage and talked about how one of her keys to success had been her ability to consistently save 70% of her income.

This strategy had helped her move from rags to riches. She maintained this was an important way to look at income, irrespective of how wealthy one becomes.

When the figure of 70% was mentioned, the response from the room was a sigh of disbelief. It was difficult for many to conceive how someone could save with such discipline and commitment.

But we should be asking ourselves why such behaviour is not the norm.

We have comfortably moved into a state of being where it is the norm to spend most of what we make. We are living beyond our means and continuing to increase our already high levels of indebtedness.

Then we wonder why we do not have the financial flexibility to achieve the legacy we would like to have in life. Our financial means exist to enable us to have the impact we aspire to have.

The South African Savings Institute has earmarked July as National Savings Month. We should use it as an opportunity to challenge our views and start being more proactive with our savings.

This is not something we should consider doing because there is a big celebration or event coming up - it should be how we operate every day.

Saving most of my income has always been the norm. It has given me the flexibility to provide seed investments to a wide variety of businesses, allowing me to achieve my legacy of growing Africa through supporting entrepreneurs, without being limited by external factors.

One of my investee companies is a fintech start-up in Nigeria that is working on introducing a savings culture across Africa through digitisation and peer-based collaboration for reaching savings targets. It is fulfilling to be able to contribute to something I believe in.

The benefit of savings is that you have far more options and are never at the mercy of a financial institution whose presence in your life can lead to sleepless nights. You are essentially buying yourself flexibility to make financial decisions based on your goals and life plans, instead of the fear and intimidation from those to whom you are indebted.

In the current recessionary environment, many people have been unable to follow through with executing their life plans because they have not saved enough for them or cannot keep up with rising costs. Banks have tightened their lending.

It would obviously be unrealistic to expect ourselves to start behaving differently tomorrow. Our poor savings culture and high levels of indebtedness come from generations of not understanding the basics of wealth creation and management.

We do not all need to go and acquire degrees on wealth management, but we can start with simple things such as making money a part of the conversations we have at home. Many families do not talk about money, and all that children are exposed to is a snippet of the whole thing - usually when some crisis surfaces.

We need to start talking about the family's financial situation at the dinner table, explaining why certain financial decisions and trade-offs have been made, emphasising the mistakes that have been made and learnt from. We also need to start teaching the basics of savings and investing through day-to-day application. It can start with something as simple as encouraging a child to save a portion of their daily lunch money.

This is important for the millennial generation particularly, because of their culture of instant gratification, whose fundamentals are completely different to the long-term approach needed for wealth creation.

We need a multigenerational view of how we think about wealth. Creating an overall family portfolio will last beyond our time. We cannot be getting excited about owning a portfolio of highly priced but depreciating vehicles that will only be a burden to the generations that follow.

We should be getting excited about portfolios of quality assets whose value stands to increase across generations. We should stop overburdening our breadwinners with spending on items of short-term and non-multipliable value.

Sikhakhane is a global speaker and business strategist on leadership, entrepreneurship and doing business in Africa, with an MBA from Stanford University

Please sign in or register to comment.