To Save and to Keep

Spending less than you earn is common sense. An average employee or income earner knows this deep down. Spending less than one earns is one of the usual suspects in many a failed New Year Resolution. We routinely give in to aimless spending in the holiday season, pay the price in the New Year as parents struggle with school fees and other mandatory expenses, and become sober for a season, even start saving. Sadly, a few months down the road, the money is unsaved. It is dragged kicking and screaming from our savings account as we slip back to old comfy habits.

Knowing what to do is actually the easy part. That is why the web and libraries are awash with “How to” information and books. For every human desire, there is a “how to”. How to lose weight in 3 months or less, how to achieve financial freedom in 6 months, how to make so much within a week by putting in only two hours a week or less – make money while you watch TV. If wishes were horses, fools would ride. Actually going ahead and doing it on a sustainable basis is what separates the men from the boys.

As with any field of human endeavor, acting differently on a sustainable basis requires a change in mindset. In computer terms, it means a software upgrade.

The big question is – how can you keep what you have saved?

There are competing demands all around – your own immediate needs begging for attention – topping up your phone, fuel costs and car repairs, children’s birthday party, aso ebi (party uniform?), demands and calls for help from friends and family, the list goes on and on. How do you keep soldiering on as a valiant savings warrior amidst the cacophony of all these noises? How do you keep your long-spending arms away from your precious and vulnerable savings?

You need to move your money into a witness protection program. A star witness in a criminal case is protected by the police to avoid being silenced by crime warlords. The witness (in this case your money) is in danger while you are the Boss seeking to eliminate it. Put your money out of your spending reach and circulation. Invest it. If you are interested in precious metals, buy gold, silver, or whatever metal you want to invest in. If you are interested in stocks, call your stockbroker. If you are interested in real estate, pay it into your real estate savings account with your mortgage banker or an account you cannot withdraw from. If you are interested in buying and selling, convert the cash to inventory. If you are clueless (you don’t know what to do yet), put the money in a fixed deposit account while you learn the ropes.

Do not leave the money to cool its heels in a savings or current account. Keep it out of reach of ATM machines, checkbooks, online banking, or whatever. Make it disappear from your radar.

So what happens to the sea of demands all around you?

Have a budget – assign funds to phone bills, fuel, giving, offering, what have you, AND STICK TO IT. If your budget for giving is five thousand naira a month, the moment that fund is exhausted, defer all acts of kindness to next month. We cannot solve all the world’s problems. We need to be strong before we attempt to help others beyond our current capacity. If you do not have sufficient blood volume and attempt to be the hero by donating more blood, you will bleed to death. The banks are there to give loans. They are experienced in project financing, overdrafts, and bridge funding, including the infamous payday loans. If we try to become the bank/ATM machine to friends and family, if our liquidity and capital adequacy ratio is not sound, we will become distressed with no Central Bank to bail us out.

There is a time for everything under the sun – the time to sow and the time to reap; a time to give and the time to hold back; a time to invest and the time to take profits. If you mix it all up, consume your capital at seed time, and live from hand to mouth, you will yawn (with hunger) at the time of harvest. A farmer understands the concept of seed time and harvest. If you observe a farmer consuming his seed in the planting season, you do not need a prophet to tell you that the dude will become a laborer to other farmers at harvest time. Your income is your seed. If you cannot hold on to it long enough to invest (plant) it and wait for harvest, you will continue working at the harvest field of others.