“Money management” the financial stress reducer
Opinion, Personal Finance

Recently, there have been echoes across many sectors in Zambia of the advent of austerity. We have heart a number of public figures speak about the importance of tightening our belts. There is evidence from the FMCG world that signs of recession are in our midst. Recently on Bloomberg, Africa’s biggest grocer announced that poorer shoppers are cutting spending. So the question that needs to be asked is that “if the one of the biggest grocers in Africa is seeing signals of reduced spending from its core clientele, does that not indicate that money management is becoming more important”. Worse still, is it safe to say Zambians are not saving enough for retirement?  Could it be due to the lack of sufficient knowledge, funds & the discipline required to save?  Financial planning is essential to achieving set financial goals.  And just how many Zambians are financially included?  FinScope Zambia, from a survey conducted in 2015, notes that 40% of Zambia’s adult population possesses basic financial planning skills.

What then needs to happen to improve the current 40% score?  The need to grow our knowledge base in finances is essential.   We must understand what to do with our money than merely save and acknowledge the importance of budgeting, planning and stocking up for the future.

 

Why plan ahead?  The future is uncertain, that’s for sure.  It is advisable to consistently save a portion of your income for the unknown whilst religiously managing finances through budget allocation.   If sufficient planning is not done, of course cases of debt, stress and marital disputes will continue to be the norm.

 

How must one save and invest appropriately?  This is done by identifying the most suitable choice of investment, analyzing the available sources of income, assessing the risk appetite and ascertaining the end objective of the investment i.e. revenue generation and/or income growth.  The investment basket in Zambia ranges from regular savings plans, savings accounts, insurance products, local and offshore bonds, real estate, property, stocks ,shares and mutual funds which are readily available and accessible.

 

Growth of investments depends on one’s portfolio and risk appetite. By spreading the risk across products, identifying any hidden costs and being knowledgeable about the market performance, investments are prone to boom than fail.  When the returns kick in, it’s much safer to re invest the returns before consumption. A solid investment culture before consumption of returns is key.

 

In conclusion, food for thought to the ladies, a marriage proposal sounds good but how about a well planned retirement plan?  To the parents, teach your kids money habits that will help them win in the future.  Kids should not hide in their rooms whilst you work on the budget, at a reasonable age they should be involved as well. This could be potentially the best thing you would ever teach them as they would possess this trait for life.

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