A man hands over bundles of cash. PHOTO/Rachel Mabala
You might put money aside to save. But in case of any problem, you rush to withdraw everything.
The probability of replacing this money is very small as daily demands keep escalating. This might force people to term you as ‘stingy’ whereas to others, it might look like a saving strategy.
Mr Newton Butereba, a financial advisor and wealth coach, says the word stingy usually comes from whoever wants money.
“The person trying to borrow is the one that brands the other as stingy. It means you might have the money when you do not,” Mr Butereba says.
For instance, you might have a salary of Shs5m but with a salary loan and sick relative. But the remaining amount is what you have to make ends meet.
However, Mr Butereba notes that saving realistically means putting money aside with a goal.
“If you are saving Shs400,000 a month, what are you saving for and for how long?” If you do not have an answer, then you are saving for nothing.
He urges people to start saving for a vision. For example, if someone wants to be wealthy; ask yourself, “What would give me the standards to get it?” The goal is to get Shs150m but in how many years?
Try to visualise whatever you want to have, demarcate and estimate how much it would cost you and the period it might take you to achieve your goal (giving yourself a timeline). This means you put money aside every month for a house and take note that this is not your money.
In addition, even if your friend has a wedding, you do not have to touch the money saved because it no longer belongs to you and that you are saving with a goal.
He notes that once the money is deducted, then you are not saving. However, you can find other means of getting resources such borrowing.
“When saving for a goal, you are always in debt. In order to avoid judgmental people who might think that you do not want to help them with your money as you try to save for your goal; better keep the secret to yourself,” Mr Butereba says.
Balancing social life, saving
Financial advisors say a person must save 10 per cent of their income with a goal for investing, put 20 per cent aside for paying debts and 70 per cent is for living within your means.
If your income is Shs1m, Shs100,000 is for investing ( that is 10 per cent of your savings), Shs200,000 for the people you owed money (the cake set aside for your lenders who might either get Shs10,000, Shs50,000. This has to be distributed within the 20 per cent. The remaining Shs700,000 (70 percent ) has to cater for housing, transport, feeding, healthcare, contributing to weddings, bars (a drink) and buying your spouse a gift.
He says:“If the 70 per cent is not enough, it is an alarm to increase your income such that instead of earning Shs1m, you earn Shs2m.”
If you earn Shs700,000, 10 per cent of saving is Shs70,000, 20 per cent is Shs140,000 (paying debts) and 70 per cent is Sh490,000 that has to cater for personal needs.
Most of the saving habits have to be dealt with at a personal level such as the how to deal with your earnings and sources.
“You need to be serious with your finances. Do not impress people. Do not try to donate Shs1m with a view of those donating only Sh500,000 or Sh50,000 as being stingy,” Mr Butereba says. You are better off sticking with someone who donates or pledges Shs50,000 because they have other responsibilities.
He further adds that financial independence is a deliberate attempt to look at your life and know you have to do something, for instance, how to get daily, monthly and yearly income.
Saving versus being stingy
According to Webster Dictionary, saving refers to income not spent, or deferred consumption aimed at achieving an intended objective. It involves setting aside time, energy and resources for future use.
On the other hand, stinginess refers to a habit that is devoid of spending. Stingy people withhold and find it uncomfortable to give out what they have regardless of whether they have little or more.
Mr Peter Ntale, the deputy Director-Faculty of Graduate Studies & Research, Makerere University Business School (MUBS), says stingy people go to great length to save since they hold onto everything they have.
“This may therefore suggest that stinginess is one way through which savings may be mobilised,” he notes.
However, this assertion is refuted by Ouyang et al (2018) who found out that savings from stingy people are not aimed at futuristic use. Their stinginess comes from the insecurity that arises out of fears of not having enough resources and that by giving out, they will lack such resources in the near future hence making them hold onto their resources not for future investment as opposed to those who intentionally save.
Mr Ntale adds that whereas saving is intentional, stinginess may not entirely be and you can train people to save some of their resources for futuristic use.
On the other hand, stinginess is inherent and the extent to which it may be learnt from others is dependent on personal experiences.
He says: “A person who was generous and eventually lost resources may decide to become stingy to protect the little remaining. Alternatively, a person who has had a bad experience with generosity may adopt stinginess as a coping mechanism.”
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