OLU OJO PHILLIPS
Today is World Savings Day. The World Savings Day was first celebrated on October 31, 1924 during the first International Savings Bank Congress (World Society of Savings Banks) in Milano, Italy. The Italian Professor, Filippo Ravizza declared this day as the International Savings Day on the last day of the Congress.
With the deluge of credit being offered online these days, it is becoming pretty difficult to promote savings as a business. I just hoped that Africans would not imbibe the American culture of credit-fuelled spending spree. From Nairobi to Lagos, the culture of credit is growing at astronomical rates.
Some individuals even borrowed money to play the lottery. We all know that saving is important, and when the economy hits upon tough times, having money in the bank can be a godsend.
But with inflation fears running rampant, though, is savings really worthwhile? To celebrate World Savings Day, I am inclined to present convincing reasons why saving money is still sage advice in an economy that’s struggling to recover.
Saving money requires a lot of discipline. However, with a firm determination, it is not a difficult habit to adopt. Many Africans can benefit greatly from the habit of saving if they choose to do it faithfully. Some of these benefits are described below:
- Helps in emergencies
Emergencies are what they are; they are always unexpected. Therefore, when they occur, the funds required are usually not part of the regular budget. There will be pressure to look for extra funds at short notice.
This problem can be compounded if the emergency is a sudden illness or car accident. It could be a matter of life and death. Accumulated savings can go a long way in alleviating the situation. Other emergencies that could be financed through savings are funeral expenses, urgent house repairs and even car repairs.
- Cushions against sudden job loss
Job loss is usually traumatic. It can leave a family in a crisis. Savings can be a great cushion of comfort at this time of sudden loss of income. It is usually very difficult to borrow money when one is jobless. Therefore, those who are not wise enough to save will be down to zero completely after a job loss.
- Helps to finance vacations
Many Africans would love to go on vacation at least once a year. However, this is normally not possible because of the lack of funds. Having accumulated savings can make the dream of going on vacation a reality. Family and friends can enjoy a time of rest, relaxation and bonding together. Using savings to go on vacation is a much better option than getting into debt.
- Limits debt
Having some amount in savings can help you to limit your amount of debt burden. Savings can be used to finance certain expenses instead of borrowing. This will definitely limit the amount of debt liability and will also save the amount that could have been spent on interest.
- Gives financial freedom
Accumulated savings gives you peace of mind and helps you to enjoy financial freedom. There is a comfort in knowing that there is a buffer than can be used if funds are needed urgently. This is in contrast to those who live from one salary to the next. They immediately become stuck financially if any unexpected expense arises.
- Helps prepare for retirement
There are long-term benefits of savings. One of them is having funds available for retirement. Many retirees who rely on a pension usually do not have enough to cater to all their needs. Making a habit of saving a small portion of your income over several years can accumulate into a substantial amount of retirement funds. This will make retirement much more comfortable.
- Helps finance further education
A fee for further education is a major expense in most African countries. Accumulated savings will enable you to further your education without having to source funds elsewhere. This will help one to progress quickly in his or her career. This is especially beneficial for those who may not be eligible to apply for a personal loan or education loan.
- Helps to finance the down payment for a mortgage
Having savings can be the first step towards becoming a proud homeowner. The banks require that a mortgage applicant places a down payment of a certain percentage before the loan is approved.
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The amount to be given as a deposit cannot be borrowed. Therefore, the applicant will need to obtain it from savings or from family and friends. Savings will be a better option because family and friends may not have the funds required.
- Helps to finance a wedding
Weddings are a major expense in most cultures in Africa. Many couples end up postponing their weddings because of financial constraints. Having accumulated savings enables the couple to plan their day confidently. Using savings to finance a wedding is a much better option than taking a wedding loan because the couple will start their married life together free from debt.
- Helps to finance the down payment for a car
Depending on the amount required for the car, you can use savings either to purchase the car in full or pay the initial deposit for a car loan. It is more ideal for you to budget for a cheaper car which can be fully financed by your savings and avoid taking the car loan. This will enable the buyer to save the money that would have been spent on the interest.
The above points show that those who exercise the discipline of savings have a much lower probability of entering into a financial crisis. It is a worthwhile habit to adopt.
About World Savings Day
For more than 90 years, World Society of Savings Banks (WSBI) and its members have spearheaded the celebrations of the World Savings Day annually to promote the virtue of saving money.
World Savings Day or World Thrift Day was conceived to increase public awareness of the importance of savings both in the context of modern economies and for individuals globally.
The core objective is to encourage people to save money in a bank rather than keep it under the mattresses or in a piggybank at home. Currently, over 80 countries observed World Savings Day.
Why it’s important
The World Savings Day focuses on the stabilising the role played by savings and retail banking in the overall financial system. It evokes some of the ethos of local banks, which is to be responsible partners in the communities, close to the customers, serving households, small and SMEs and local authorities.
Member banks of WSBI have demonstrated their locally focused approach to banking through World Savings Day activities in the communities that they serve.