Ways to build solid saving and investment culture

Living on the edge is a phrase often tossed around as a joke in conversations. But for most Kenyans, they’re living on the edge financially, and this isn’t a laughing matter.

Not having enough money in the bank is more than a mathematical problem.

A lack of savings can also cause significant stress, which can lead to a host of problems, such as depression and heart diseases. Saving money isn’t complicated in theory. However, saving money for the future can be challenging.

From overspending and financial setbacks to incurring massive debt and simply just not making enough money, there are a variety of hurdles you’ll have to overcome.

Cultivating the habit of savings is very important. It can help you in many aspects of life. A good saver can set aside funds for business, is debt free and has already made a right as well as a bold step to financial freedom. A good saver can also reach certain goals that can’t be ordinarily attained on the limited revenues one gets.

People and companies tend to save and invest if they trust the institutions that manage their money and the economy at large. Countries with a high savings rate withstand financial shocks and channel more funds towards critical sectors of their economies. However, building this resilience is steeped in a culture of saving and investment.

Around 99.3 percent of bank accounts in Kenya less than Sh1 million in savings, only 0.7 percent have deposits of more than Sh1 million. One in every two youths in Kenya points an accusing finger at debt as the impediment to investing and saving. Kenyans save but due to high charges on bank accounts, they have turned to chamas (merry-go-round).

Why don’t we save more?

With more than 40 percent unemployment, poorly paying jobs and the high cost of basic food items this may leave less to save and invest.

What can be done to boost investment and saving?

There are at least three ways the government can act.

First, it can strengthen property rights, especially around land titling, which will promote greater saving and investment in real estate.

Business environment

Second, it can take measures to improve the business environment and address infrastructure bottlenecks especially energy and transport, so that business will have an incentive to save and invest in new projects.

Third, it can shift in public expenditures and spend more on infrastructure than on wages, goods and services.

At an individual level, you need to assess your financial health to help you know the direction you’re headed and how to achieve financial freedom.

Have a clear picture of your income and expenses, know what takes the bulk of your money and ascertain whether you spend more than you earn. When you have this figured out then you can move to the next step.

Financial institutions should do more to help bring more people, especially youth and children on board to enhance savings.

Having your mind focused on saving would help you save better. Also, if you still have money left at the end of the month, rather than spend it unwisely, the best bet is to save it. This could help you reach your investment goal faster.