Discipline of Saving-KPMG

Discipline of Saving
KPMG Uganda
End of Year Retreat
December 2008
Alfred Brian AGABA

Internal Audit, Risk & Compliance Services
Agenda
Saving- What is it?

Saving- Why?
Saving- When to start?
6 Personal Financial Management principles
8 Principles on Saving
Saving- Where is the money to save?
Saving- Where to save?
Some common sayings on saving
Conclusion
2
Saving- What is it?
In a broader sense, saving is typically used to

refer to economizing, cutting costs, or to rescue
someone or something.
In terms of personal finance, saving refers to

preserving money for future use - typically by
putting it on deposit - this is distinct from
investment where there is an element of risk.
3
Saving- Why?
Assume four stages in Life:

I. Childhood
II. Early employment
III. Mid/Top employment
IV. Retirement
4
Saving- Why?
Life’s Stages vs. Income & Expenses
I II III IV
Life’s Stages
Income Expenses
5
Saving- Why?
Life Stages vs. Financing:

I. Childhood- Your parents
II. Early employment- Your earnings
III. Mid/Top employment- Your earnings
IV. Retirement- Who?????????- Your savings
6
Saving- Why?
The main notion of saving is…
… coming to terms with the fact that a time

will come when you will have needs to meet
but will not be earning. You should therefore
use the time when you can earn to raise
funds for the time when you will not be
earning.
7
Saving- When to start?
Now!!!
“You have enough money to start saving”. Owino

market vendors save Ushs 1,000 per day and
currently most of them stay in their own houses
-simple they maybe, but they don’t rent.
8
6 Personal Fin. Mgt. principles
i. “Live within your means”
ii. “Cut your coat according to the cloth’s size”
iii. “As far as possible, do not make credit a part

of your lives” - many live at 130% - 150% of
their earnings. i.e. Borrowing, salary advance,
loan sharks etc to consume.
iv. “Be content”
9
6 Personal Fin. Mgt. principles
v. “Do not spend to please others” - either they

don’t care or they will only get jealous of what
you have spent on.
vi. “The mark of adulthood is the ability to take

responsibility for one’s actions”- Take
personal responsibility for your finances and stop
‘blame-mania’.
10
8 Principles on Saving
8) “It’s not what you earn but what you keep that
determines your financial success in future”.
7) “If your dream is lifelong poverty, then generously

pay the landlord, taxis, supermarket, school, friends
but please DO NOT pay yourself”. Saving is actually
paying yourself. It is arguably the hardest discipline in
Personal Fin. Mgt. Consider saving, a current “expense”
that will meet your future expenses.
11
8 Saving principles
6) “Start by saving what you can afford”. Do not be over-

ambitious. You might start saving a huge amount and
give up shortly. The discipline is better than the amount.
Once you have learnt the discipline, increase the amount.
5) “Save for a reason- when you save for nothing in

particular, you spend the savings on nothing in
particular” One could save for many reasons: for
medical insurance, for land, for education, for rent, for
investment, for retirement etc.
12
8 Saving principles
4) “Save when it makes financial sense”. Loan interest might

be lower than the increase in cost of land over the period of
saving. In such a case, do not save for land, take a loan and
buy the land then repay the loan.
3) “Close the leaking tap”. Some fail to save because many

‘money taps’ are leaking.
2) “Put it where you can’t reach it” if you do not trust yourself
with keeping the money you have saved, then put it far from
you- say a fixed deposit account or a SACCO etc.
13
8 Saving principles
1) “Have a healthy balance between saving and

consuming”.
Why eat posho and beans for 365 days a year because
you are trying to save, yet you earn 5m per month? To
the other extreme, why eat breakfast, lunch and supper
at Serena everyday because you earn 5m per month? To
know how much to save, you need to be able to strike a
healthy balance.
14
i. “The best way to save money is not to lose it”.

a. Consider changing to energy saving bulbs in your house.
They use less energy, last 10 times as long and produce
less heat.
b. Turn lighting in the house off in the rooms where it’s not in
use.
c. Plan on how much you are going to spend in a wedding

meeting before the meeting starts.
d. For long personal calls, consider off-peak hours or arrange

a meeting instead and avoid the call.
15
“The best way to save money is not to lose it”. (Cont’d)
e. If you are flying, both first class fliers and economy class
reach destination at same time- except if it makes business
sense.
f. Prepare a shopping list for food budgets before you go to

shopping mall if you are an impulsive spender.
g. Change your lifestyle (middle to upper income earners)-

why live in a 300k house when u earn 500k? Think of
sharing houses where possible
h. Etc. etc. etc. think of your life, you will identify many more.
16
ii. “You can’t save money you don’t have-make it first”.

a. Use your assets to make money for you: For example, I
had a car that I used to transport me and also as a special
hire.
b. Re-align your assets to make them more valuable: For

example, I sold the car and purchased a boda-boda that
was half the price of the car but earned almost as much as
the car.
c. Still young? Improve your skills: For example, I have

earned some money from making business plans for
companies. I read a lot and taught myself the skill.
17
“You can’t save money you don’t have-make it first”.
(Cont’d)
d. Set up a business: You may set up a business from your

hobbies or something you love doing. NB: Not everyone
has what it takes to run a business.
e. Do not necessarily increase your spending after a salary

increment: Increments are some of the most wasted
resource. You may slightly increase your standard of living
but make a deliberate effort to save or invest a bit of the
excess.
18
Saving- Where to save?
Time Horizon Objective Saving Vehicle

Short Term e.g. Emergency e.g. Savings account
Medium Term e.g. Education, Land e.g. Fixed desposit

account, staff SACCO
Long Term e.g. Retirement e.g. Stock Market,

Real estate
19
Accessibility of savings vs. Time period
Inaccessible
Accessibility
Accessible
ST LT
Time Period
20
Some common sayings on saving
“ Saving is not for the faint hearted in life for it calls for assertiveness and
self control ”
“Average people do not expect to succeed ”
“A key to your financial success is to treat your money or savings as your

employees who must work for you. Stop working for money and let
money work for you”
“Everything that can be counted does not necessarily count; everything

that counts cannot necessarily be counted”
21
Conclusion
““There is no poverty as great as the poverty of the mind.

This is always expressed as ‘I can’t’ ‘it is impossible’”
No wonder, the average person is recorded as using only
10% of their brain capacity. Cemeteries are filled with dead
dreams and hopes because of our natural tendencies
towards pessimism. You can be financially successful, so
start to dream again.
And dream BIG!!!!
Then Act!!!
22
Presenter’s contact details
Alfred Brian AGABA
Internal Audit, Risk & Compliance Services
KPMG
+256-712-959-525
[email protected]
23

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Discipline of Saving

Alfred Brian AGABA

Saving- What is it?

In a broader sense, saving is typically used to

In terms of personal finance, saving refers to

Assume four stages in Life:

II. Early employment

III. Mid/Top employment

Life Stages vs. Financing:

II. Early employment- Your earnings

III. Mid/Top employment- Your earnings

IV. Retirement- Who?????????- Your savings

The main notion of saving is…

… coming to terms with the fact that a time

“You have enough money to start saving”. Owino

ii. “Cut your coat according to the cloth’s size”

iii. “As far as possible, do not make credit a part

iv. “Be content”

v. “Do not spend to please others” - either they

vi. “The mark of adulthood is the ability to take

7) “If your dream is lifelong poverty, then generously

6) “Start by saving what you can afford”. Do not be over-

5) “Save for a reason- when you save for nothing in

4) “Save when it makes financial sense”. Loan interest might

3) “Close the leaking tap”. Some fail to save because many

1) “Have a healthy balance between saving and

i. “The best way to save money is not to lose it”.

c. Plan on how much you are going to spend in a wedding

d. For long personal calls, consider off-peak hours or arrange

f. Prepare a shopping list for food budgets before you go to

g. Change your lifestyle (middle to upper income earners)-

ii. “You can’t save money you don’t have-make it first”.

b. Re-align your assets to make them more valuable: For

c. Still young? Improve your skills: For example, I have

d. Set up a business: You may set up a business from your

e. Do not necessarily increase your spending after a salary

Time Horizon Objective Saving Vehicle

Medium Term e.g. Education, Land e.g. Fixed desposit

Long Term e.g. Retirement e.g. Stock Market,

“Average people do not expect to succeed ”

“A key to your financial success is to treat your money or savings as your

“Everything that can be counted does not necessarily count; everything

““There is no poverty as great as the poverty of the mind.

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