For episode 1
Welcome to another milestone on our journey to building an enduring wealth!
Our last class (article) was an introduction to this journey while our destination is to create and build wealth that will outlive us.
Please be reminded that we mentioned some of the basic truths we know but fail to practise, the critical ingredients for creating wealth (mental activity, time, pen and paper) and the steps we need to take to build an enduring wealth (give to God, discipline yourself and take risks). Today, we will revisit one of the basic truths vis-a-vis one of the steps which is ‘Savings’ which can be achieved by disciplining ourselves.
Saving is simply putting aside part of one’s income. It is a conscious effort of not spending all you earn or received whether all your needs are met or not. The underlying truth is that our expenses will always pursue and catch up with our income. Therefore, the responsibility is on us to evict ourselves from this rat race on time. I’m aware that some ‘take-home’ cannot actually take us home, but delaying gratification and inculcating the principle of saving is an attitude that must be imbibed if you intend to leave an inheritance for your children’s children.
The following questions come to mind whenever the principle of saving is mentioned:
* What percentage of my income should I save?
* What can I do with the money saved?
* Can I borrow from the saved money in case of an emergency?
* How do I save, when I don’t have a regular/steady income?
* How do I know if I’m saving enough or less?
There is no hard/fast rule about savings but the most important thing is to make it a personal value and culture. To answer the above questions, I will borrow the biblical principle used by Joseph in Egypt. In order to have enough to sustain them in seven years of famine, the Egyptians brought one-fifth of their harvest to Joseph to store. In our modern time, it implies twenty percent (20%). Irrespective of your level of income, I admonish you put more than 20% aside (but the minimum should be 20%). Some school of thought advised that you pay yourself 10% while some agreed that an additional 10% should be set aside for investment. However, the school you decide to agree with, the truth is you must be hard on yourself to begin. It is not impossible to do 40 – 50%. That is alarming, I can hear you cry out but delaying gratification will reap enormous benefits on the long run.
The money saved after a certain period of time should be moved to a profitable investment. it is better to start with a low-yield investment and subsequently a high-yield investment. From the parable of the talents, the master was angry with the servant he gave one talent because he hid the talent in the ground. The Master was angry and told him the least he could have done was to put the talent/money in the bank. This implies that is the least thing you can do with your savings. Moreover, that is a good place to start from. Though the yield on fixed deposit is relatively low and fluctuating, it is one of the best thing you can do for a start. Having mastered the art of consistent savings, you can then move to medium and high investments. Your investment can be to finance your own business or invest in someone else’s business. Please be wise and don’t patronise any of the get-rich-quick schemes prevalent in our environment now. You cannot afford to stop at the level of savings but put to use whatever talents/money you have like the servants that was given five and two talents respectively. Taking a risk is the watchword here. You win and you loose at times, but the truth is that you won’t remain the same.
Borrowing from the saved money is inevitable if it involves a life/death situation but I trust God not to bring us to that point. If you have to, please do so with the intention of paying back especially if it is from a common purse (husband & wife joint savings account). Also note that doing this should be your last resort and the repayment plan should be documented before the fund is utilised for the emergency situation alone. A word of caution is to stay out of debt. Instead save to meet a specific obligation such as getting an apartment, buying a car, paying school fees, starting a business and many more.
Irregular income is not a good reason not to save. Once you have a fixed percentage you have decided to always put aside, you should stick to it whenever you have an income. You can save unexpected income/gift and reduce your expenses drastically during such period when a pay cheque or profit from a business is not guaranteed. The litmus test for knowing if you are saving enough or less is when you are not borrowing. The biblical injunction to owe no man anything but love is the principle to be applied here. You cannot create wealth if you are indebted to people (a borrower will remain a servant to the lender, this include emotional bondage/enslavement). As much as possible, live below your means and do not gratify all the desires/cravings of your heart. Monitor your expenses, delay gratification and enjoyment and you will be surprised at the level of confidence you will exhibit when your wealth is being multiplied.
To reiterate the message being passed across (action points);
* Save a specific percentage of your income
* Be consistent with it
* Move your savings to a profitable investment after a certain period
* Do not borrow/stay out of debt
* Live below your means
* Delay gratification
* Make a commitment to leave an inheritance for your children’s children
See you at the top of the ladder where the roll call for wealth creators will be made!
Let Integrity Be Your Most
Wealth series comes up every Tuesday fortnightly.
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