SAVING, AN AFRICAN PERSPECTIVE.
Financial independence is the status of having enough income to pay one’s living expenses for the rest of one’s life without having to be employed or dependent on others. Income earned without having to work a job is commonly referred to as passive income.
In the African continent, money as a currency was introduced in the 18th century. This came about when the missionaries and explorers made their rounds on the continent. In ancient times barter trade, a system of exchange where participants in a transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money was common among Africans. This however changed and within no time money was adopted as a form of currency. One such way was the Merry go round, the Esusu in Nigeria, Kiteme in Central Congo, Osassa among the Mboshi of the Congo, Djana Fang of Southern Cameroon, Adashi Hausa of Northern Nigeria.
The Merry go round or Chamaa is a group of people who pool resources together usually once a month and use the resources to uplift one of the members. The Chammaa or the Table banking system is one whereby members save and borrow directly from their savings in either short-term or long-term loans. Each table banking group meets once a week or month and at this meeting members place their savings and loan repayments on a table. Once the money is collected, members present their requests for loans and the money is shared among them. The beauty of this concept is that the interests required when repaying the loan are low and can go as low as 2% which is music to the ear of many borrowers especially those in the informal sector where shylocks charge as high as 30%. You can borrow a short–term or long-term loan as well depending on how established your group is and how much money has been collected. In most cases, the loans are given on a first come first served basis because many members in the group might really want the money at the same time. At the end of each year, bonuses and dividends are shared according to everyone’s shares and amount of loan taken and repaid in full. This is where the aspect of being your own bank comes in since you get back a good portion of the interest you paid in loans meaning your lose no money. This is the beauty of table banking loans if you are able to get group members who get to understand this concept.
The traditional forms of savings have been pivoted a good example is the Esusu app which serves as an illustration of how traditional African practices are being digitized for the future.
There are different ways of savings on a low income:
1. Make a weekly “money date.” Commit to sitting down with your money once a week for a money date. During this time, update your budget, review your accounts, and track your progress against your financial goals. Like any relationship, if you want your financial life to improve, you must spend time with your money.
2.Record your expenses.
The first step to start saving money is to figure out how much you spend. Keep track of all your expenses this is utilities, this is from rent, food, transportation, and debt. With this data at hand, one can organize the numbers by categories, such as gas, groceries, and mortgage, and total each amount. Use your credit card and bank statement.
3.Find out your net worth.
To calculate your net worth, simply subtract the total liabilities from the total assets. For this exercise, it doesn’t matter how big or how small the number. It doesn’t necessarily matter if the number is negative. Your net worth is just a starting point to have something to compare against in the future.
4.Create a budget.
It’s important to create and stick to a lean budget one that encompasses every utility, savings, and debt.