Why you should spend what remains after saving

When Rashid Karangwa was sacked from a well-paying job he had just Rwf100,000 on his bank account. The ‘shocking’ dismissal got him off-guard, he says. After learning the hard way, Karangwa has been saving Rwf75,000 (or a half of his salary) per month since he landed another job six months ago. Karangwa earns Rwf150,000 per month as a cashier at a city supermarket. He says the rude reawakening when he was fired from his high-paying job hit him hard. “I had not even saved a penny before I was sacked. Since then, I have vowed to put aside more than half of my salary,” he says. Though he has not yet met his target, he says saving a half of his monthly salary (Rwf75,000) for the last six months has been a lesson for a lifetime. Karangwa says previously he lived a life of hand-to-mouth despite the fact that he had a well-paying job before. “The termination of the contract with no savings to my name despite the fat pay cheque hit me to the core that I promised myself to save as much money as I could if I got another job,” he says. Karangwa says he opened a savings account, where the Rwf75,000 monthly savings is deducted automatically from his salary account whenever his monthly pay is wired. To reduce temptations, he says he did not apply for an ATM card, a cheque book and neither does he subscribe on mobile banking. Karangwa confesses being tempted several times to withdraw the savings to take care of emergencies that keep popping up, but notes that he fights the urge by reflecting on the suffering he went through when he was laid off unceremoniously without fallback cash to sustain his former lifestyle. “For anyone to save successfully, they need to practice a high level of self-discipline and focus. It does not matter whether one is saving Rwf1,000 or Rwf1 million, what is important is to avoid the temptation of using the savings until they grow to sizeable figure. Then you can always withdraw some money to invest in a project or solve an emergency,” Karangwa advises. Advice from an expert Unlike Karangwa who has managed to put down his feet, for many people, especially in the corporate world, the savings culture is dead. For many corporates, the expenditure is most times above our means fueled by the desire to ‘be part of the group’ and to keep up appearances. This lifestyle has been blamed by pundits for the growing indebtedness among young working class people, as they acquire loans to finance unwarranted expenditures. Joseph Munyaneza, a financial analyst at Rwanda Stock Exchange, says there are various ways one can save or invest their money. “It does not matter whether one saves a few thousand francs or millions, what is important is the determination to change one’s life through own savings,” Munyaneza says. He further says one can save money on fixed deposit accounts for a given period of time and make an interest. “They can also invest in shares or government bonds on the local stock market. It does not require a lot of money as one can buy shares with as low as Rwf10,000 in big companies, like Crystal Telecom, Bank of Kigali or Bralirwa,” he says. He says those with a lot of money can invest in big projects in sectors like agribusiness or produce dealership. Munyaneza reflects on the importance of mobilising savings as a group through co-operatives, especially for people in the same income level, as a good way of accumulating money for a rainy day. “Imagine a group of 100 university students pooling together Rwf100 each daily or weekly for four years till they leave university. The money they would have accumulated with interest is enough to raise enough capital for every member to start a small business,” Munyaneza argues. He notes that the savings culture must be nurtured at a tender age if it is to take root among Rwandans, adding that savings are essential to support the economy and spur growth. He advises savers to set goals as well as exercise discipline, explaining that this will help them stay focused on the key objective – growing their savings. Munyaneza believes in the famous advice from financial experts globally of “spending what remains after saving, not saving what remains after spending”. He advises young savers and corporates to embrace and practice the lessons this adage preaches if they desire to change their lives for the better. He says following this philosophy eases the stress that arises when one has to put aside a chunk of their salary as savings. To save or not Jeanne Uwayezu Jeanne Uwayezu, tailor I save part of my daily earning with co-operative, but when the day is not good I do not save anything at all Andre Muvunyi Pacy Mbabazi Andre Muvunyi, a university student I do not save because I do not have a steady source of income. However, I try to avoid unnecessary expenditure. Pacy Mbabazi, a teacher I earn little money as a teacher, but I make it a point to save some of it with Umwalimu Sacco every month..

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Why you should spend what remains after saving