Why Save And Invest When You Can Live A Healthy Life In Debt


By Joburg Post

While most of us are battling with whether or not to save, Society, social media and debt reviewers are perpetuating and forcing us to save or be faced with the harsh reality of living in debt. Questions like "will you be able survive without a paycheck?" arise, and that scares us.  However, how do we save, and where do we even get the money to do so when we are barely surviving and do not get enough pay? On the one hand, television is preaching debt, loans, and new quick ways of taking loans and buying on credit to live lavish luxurious lifestyles. On the other hand, the cost of living is so high we can barely breathe. We are faced with a daily dilemma of whether to save and invest or not. Saving is income not spent, money put aside for a certain purpose and or deferred consumption from expenditures. While investing is a form of saving, it expends money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property.

The idea of saving and investing sounds interesting and appealing to most, and more people want to get out of debt, but are soon faced with the challenge of making ends meet. People in the middle and lower income range have been living in a rat-race for a long time, where they are channelled to live in debt, so that they appear like they've made it. The problem is wanting everything every store offers and wanting it "NOW", so since salaries cannot afford everything every store offers, people get into more debt. Though most think saving is for the rich, it is fortunately not. Look at it this way, if we stopped putting on weaves, buying take-outs, expensive make up, shoes, bags, watches, sneakers, latest phones etc. for a year and save the money, most would afford down payments for houses. Sounds doable right? Though it may be so, most do not do it and here are some of the reasons people do not save:


  1. Lack of knowledge about saving and investing; media advertises more how to take loans and how to get good credit, rarely on saving and the importance thereof.

  2. Earn little; though this may sound like an excuse, as many use it as one, the reality is that most South Africans still earn little salaries which only afford them to go to work and buy necessities. So it's still hard for most, it's not easy at all. Then there's the issue of affording school fees, if one doesn't have the money, what will they save?

  3. No succession plan in place; most people live for the now and never bother thinking about the next generation. Most have no strategy on how to meet their goals and achieve them, therefore when they get money they misuse it on unnecessary things.

  4. No vision in place as to what they should save or invest towards.

  5. Lack of trust in systems put in place; People do not know which channels to use for investing their money, and most have fallen victim to pyramid schemes and that has aided the fear of losing money.

  6. Lack of patience; people tend to think they always need quick cash, while saving and investing requires patience and discipline.

  7. Procrastination "I'll save later when I have kids"; while this sounds ridiculous, most youth have this perception, that saving is for older folk and this is untrue, as it's easier to save while you still don't have many responsibilities.


Then there is the real reason (Reliance); for most people not saving is laziness and being scared. People are lazy and some are scared to start their own businesses, and hence they don't have enough money to save. They have relied so much on their salaries (9-5) that they have a false sense of security on those cheques. People do not want to live or think beyond the limitations or parameters of their jobs as this adds an element of risk.

However being an entrepreneur advances and liberates you financially more than your normal 9-5 would, and thus you would be likely to have the money to save.

Since at the end of the day we all are striving towards being financially emancipated, we need to start by having a plan, Pule Ntsepe, a financial advisor, says "The bigger the vision, the more restricted you are in spending." So again, the element of knowing why you need money and what you are going to use it for are elementary. Here are some reasons why people should save or invest:


  1. For rainy days. -people need to start investing because they don't know what tomorrow holds so it’s better to be prepared now.

  2. For good retirement.

  3. To avoid debt and buy cash. People must invest in order to learn that you cannot live from paycheck to paycheck. It is just never enough.

  4. To take advantage of the good interest available at the time.

  5. Create a Family legacy. Investing should be every family’s ultimate goal, because of the interest the money accumulates over the years. People need to save and invest to be able to leave an inheritance for their offspring. This will help improve the affordability in more important aspects of life like education, mortgage, medical attention and business investment.

  6. For Empowerment (Employment). You invest to make your money grow, once it grows it empowers you to empower others

  7. For owning property or assets.


Now where and how do we start with this saving and investing? We start by opening our own businesses where we force foreign investors to start loosening the grip they have on us, as we start buying and supporting our own. Money will not go out of the country anymore, and more people will be employed and financially, most people will be independent. This is important as employment affects the economy and the country's gross domestic product (GDP). Once this happens, poverty is then reduced amongst a portion of the community and people will be able to afford, so less and less people will buy on credit. The more people we have out of debt the more likely people are to start saving. When you save and invest, you make your money work for you. Thus, this eliminates dependency and reliance on the 9-5, but promotes wealth. When this is done, and people understand that investing is not entirely for them, but it must even benefit those that come after them, then we instil discipline of proper management of finances instead of consumerism.

"You cannot spend all your money if you have a vision you're building, how you spend your money determines your level of commitment to your dream/s..." ~ Pule Ntsepe

 

Author:

Mpho Makgabutlane

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