Save Before Spending

Humans are creatures of habit, and psychologists say by developing habits or repeated behaviours, our decision-making is simplified, and mental energy is conserved.

Common examples include routines such as preparing breakfast or commuting to work, which simplify daily tasks and make them almost effortless.

It is widely accepted that established routines shape our daily lives, enabling us to move through life with greater ease and efficiency.

Reflecting on this, one quickly realises that throughout life we develop habits that turn into annual, monthly or daily routines – patterns that are often extremely difficult to break.

Examples include calling someone only on their birthday or Christmas while maintaining little contact throughout the year, overindulging during the festive season, and making resolutions to change habits – only to abandon them soon after the new year begins.

Experts frequently characterise humans as creatures of comfort with a tendency to seek familiar and predictable environments that provide a sense of security and stability, but that’s a topic for another day.

Today, let’s focus on building habits that strengthen our future, starting with the power of saving and the wisdom of choosing needs over wants.

We should take charge of our future by building habits that will empower, starting with the golden rule: Save before you spend.
Building a culture or habit of saving guarantees that resources are available when unexpected expenses arise, such as emergencies or medical treatment costs.

Saving allows you to build the financial foundation needed to reach important goals – whether it’s paying for the educational needs of oneself or one’s family, buying a home or securing capital for starting a new business venture.

What is Namibia’s current performance when it comes to saving?

Indications from public and private sector institutions with a fiscal monitoring and research mandates indicate that there is room for improvement.

This is emphasised by the work of researchers at tertiary educational institutions.

On the flip side of saving lies spending, and research reflects that far too many Namibians are living above their means, driven by excessive consumption, online gambling and credit-fuelled purchases from retail chains.

Offers of zero deposits and instant credit requiring little more than a payslip and no upfront proof of repayment ability fuel this appetite for spending.

Retailers entice buyers with a three-month grace period before the first instalment is due and even go as far as to advertise so-called ‘saving’ on appliances bought on credit.

A quick glance at the legal notices in The Namibian reveals just how many individuals and businesses have fallen into trouble after buying items they couldn’t truly afford.

Many who fall into a debt trap are shocked when they realise the true cost of servicing that debt.

They are stunned to discover that the interest they have paid nearly equals the original price of the goods.

A habit worth breaking is buying on credit and one worth building is saving.

Finally, many Namibians remain unbanked and, as a result, lack awareness of the savings options offered by banks and financial service providers, making it challenging to develop a consistent savings habit.

To truly instil the habit of saving before spending, we must promote financial literacy far more effectively than ever before.

– Danny Meyer is reachable at danny@smecompete.com

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