Saving is an essential aspect of life, both for humans and other living beings: bears, skunks, bats, and other animals that hibernate in the winter must make preparation by eating more food in the autumn and saving it within their bodies as extra fat and energy. Other animals such as squirrels, mice, and beavers put aside and save extra food in the autumn because food is harder to come by in the winter. If all of these animals make preparation for the future through saving, shouldn’t we?
Human beings have been blessed with many skills, but the ability to see the future is not one of them. No one can be certain what will occur in the next hour let alone what will occur in 30 years. Because of this limitation, we must always prepare for the unexpected and set something aside to counteract the mystery that is the future. Unfortunately, most Americans do not save enough to cover unforeseen expenses that may occur. See figure below.
Although the concept of saving is easily understood, it has not taken root in the minds of many. Many people value the present over the future and feel as if saving money for a later date will somehow compromise their current happiness. Human nature, along with the 21st-century mindset, desires instant gratification. Patience is truly a virtue that not many of us have. Spending everything you have today can potentially leave you broke, depressed, and stressed in the near future. As a people, we should value the present and the future equally, rather than placing today on a higher platform.
Some individuals respond to the idea of saving as if they are allergic. There is a misconception that saving takes away from the money you have earned. We need to understand that the money you set aside for the future is still your money. It does not vanish because you did not use it, but it is stored up for your own use.
This being said, the art of saving is still a difficult task that needs to be mastered. Although it is logical and theoretically sound, characteristics of human nature: desires and wants, create hurdles in the implementation of saving. Each person must be very intentional in their plan of action when it comes to saving. You must establish attainable goals in order to measure your progress. Setting up a chart detailing your weekly and monthly goals, and tracking how well you are meeting those goals will allow you to better understand your financial condition. The general rule of thumb is to save at least 20% of your paycheck. However, every individual’s situation is different. You will have to analyze your financial state, determine your long-term goals, and develop a customized savings plan in order to be able to reach your goals.
While consistently saving a portion of your paycheck should become the common practice, your emergency savings allocation should not be neglected. This emergency savings fund (rainy day fund) should hold enough money for you to continue your current lifestyle for 3 months even if you were to stop receiving any income. We live in an unpredictable world, and we must prepare for unpredictable situations.
Short term savings, long term savings, and emergency funds- all this can sound intimidating and unappealing to our craving for instantaneous pleasure. The most important aspect of saving is your mindset. The vast majority consider saving to be a luxury, whereas we would like to submit to you that it is an absolute necessity. A change of the mindset to making it a need will allow you to follow through on your savings plan. For those who have created a budget, look back and make sure that your savings are accounted for in your budget as a necessity. The theoretical understanding of the importance of saving is easy enough, but many will abandon this initiative because of their lack of discipline. Discipline, discipline, discipline. As a clever African, we hope you have learned of discipline in the home. When it comes to your finances you will need this discipline in regards to your budget, your expenses, and especially your savings. We have provided tools to help you stay within your budget. You must also set up personal goals for your savings and maintain the discipline required to stick to your plan- only then will you become a Clever African.