Be merry but spend wisely

The Festive season is upon us and while it is indeed the season to be jolly, we shouldn’t get carried away with unjustifiable and frivolous spending. This should be the season for more expenditure evaluation and less mindless purchases. Beyond the festivities, it is pertinent to prioritize your future through purposeful financial planning. This is not an attempt to slow down local consumption, far from it. It is a plea for calculated spending. A call to differentiate between necessity and luxury. An effective approach to achieving financial discipline is adopting a savings mindset. It sounds simple but remains an immense challenge today. It is an approach that requires commitment but it is rewarding in equal measure. The first step in developing an effective savings culture is to be cognisant of what constitutes a necessity and in the same vein be aware when a luxury is disguised as a necessity. Consumers generally go through a basic purchase process which typically begins with perception of a need, seeking and analyzing value, then finally buying the product. Often times we are misguided during the first part of this process, where a miscalculation of our needs results in an unnecessary purchase. Stay vigilant of your needs, and address them thoughtfully. The next element of developing a savings culture is effective management of your unused funds. We have come a long way from using kitchen apparatus to store our hard earned money. Today one is able to utilize a multitude of options from financial institutions that cater for deposit and saving needs. What is even more interesting is that these high quality products also enable customers to run checking accounts that are automatically linked to savings accounts which enables easy management of funds. It is commendable to note that savings in Rwanda as a whole has substantially increased over the past 10 years. In 2005, total deposits in Rwanda were Rwf268 million; today deposits stand at Rwf 1.2 trillion, an impressive feat by any measure. During that time, Rwandans with savings accounts increased from 9.2% to 30%. This growth in deposits is a vital contributor to economic growth as it affords resources for investment. This kind of growth is noteworthy but still not sufficient. More has to be done. Going forward savings will probably be one of our main sources of capital accumulation. It’s always dangerous to depend on external support such as aid. Self sufficiency should be the priority both nationally and personally. The Agaciro Fund exemplifies this notion. Thousands of people put together what they have saved for a rainy day, and it has grown into a movement of pride that is looking to foster national development. On a personal level, once you are mentally tuned to pursuing savings as a lifestyle, train yourself to employing techniques such as budgeting, pay attention to all your costs which should include potential leakage like residue form shopping balances, make mandatory payments into your savings account on a regular basis and don’t spend while counting on windfalls, which basically means spend only what you have, not what you think you might have in the future. As I said earlier, spend on what is absolutely necessary and if this means purchasing a gift or two for a loved one during this festive period do not hold back. Happy Holidays! The writer is the Manager, Communication and External Affairs, GTBank (Rwanda) Ltd albert.akimanzi@gtbank.com

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Be merry but spend wisely