Save and create wealth

One of my daughters is a very talented musician and yes that is my assessment of her as an “unbiased” parent. She is an avid piano player and loves to compose her own tunes (I hesitate to call her compositions songs as they don’t quite fit the bill).

What bothers me about this budding pianist of mine is that she spends an inordinate amount of her piano practice sessions practicing her compositions instead of the music pieces that she will be examined on; something I felt would ultimately affect her ability to read music.
When I raised my concerns with her teacher, I was told that I shouldn’t be overly concerned about my daughter’s sight reading or lack of it as she is “very talented” and she can play most music pieces by ear. Well, that was until we saw the results of her music practical exam; she scored below average in the sight reading section which dragged down her overall exam grade to a Pass.

Interestingly, as soon as my daughter saw her results she said to me “Mummy you are right I have a challenge with sight reading”. I shook my head in amazement at her change of stance because we have had so many fights over this one issue, many times it felt like I was speaking a foreign language and failing to communicate. Then again there is nothing that gives one a reality check like exam results.

One of the ills that plague us as human beings is refusal to see things as they are, even when they are so obvious. All around us, we see colleagues, friends and acquaintances dealing with issues or clear symptoms of a problem, all the while refusing to acknowledge they have a problem.

Actually, none of us is spared from this selective blindness, the most common one being our reluctance to accept reality when we are overweight or unfit. It is not until one tries on some of their favourite clothes and finds that they no longer fit that they begin to acknowledge they are eating too much.

Or you get a doctor’s report that shows that you have a medical condition that could have been prevented if you were exercising regularly. So much has been said and written on the subject of healthy eating and physical exercise, it is a shame that present day society, especially the educated, are still battling obesity and unfitness.

One of the current trends I find particularly dangerous is our blindness to the glaring evidence that Africa in general and Uganda in particular, has a very poor or non-existent saving culture. If one scrutinises the lifestyles in most African cities, it is clear that we derive more pleasure from spending than we do from wealth creation.

Lessons from Asia
The thing I admire about communities with a strong saving culture, particularly those from the Asian sub-continent, is their attachment and commitment to wealth creation. Somehow, these communities have done a fantastic job of modelling to their children positive behaviour around frugality and wealth creation.

They teach their children to enjoy and get pleasure from building and accumulating wealth. Typically, in these families Junior will be praised for being frugal and for saving his pocket money. He is taught the value of money and the virtues of saving before you spend. He is taught to attach pleasure to the accumulation of money that he has worked for.

The children in these families watch their parents save on a daily basis and postpone expenditure until it is absolutely necessary.

Generally speaking, these children do not see mum or dad with a long face because they are saving up for the next business venture. They hear their mum tell her sisters and her parents how they can afford to buy a brand new car but have opted to keep their old beat- up Toyota until the family business has trebled in size.

These children’s community celebrates financial independence and places a high premium on incremental wealth creation. They see their parents, relatives and family- friends start small and grow big gradually.

Poor saving culture vs expenditure
Sadly, by contrast in the typical African family, when Junior does well at school he is taken on a shopping spree and asked to choose whatever his heart desires.

Our children see us spending and splurging on every triviality and at the slightest provocation, buy them stuff they don’t need. You really pity our children because the behaviour we model to them is that “every time you are in a good mood go out and spend”.

When Dad or Mum has had a good day or a good week they take the family out to an expensive restaurant or they buy the kids some lavish gift. The only time our children see us doing a budget or think before we spend is when we are financially strained and unhappy. The message we are sending our children is that spending is pleasurable and that planning expenditure is only for sombre moments. We seem to subconsciously associate frugality, saving and living within our means with sadness, lack and poverty which is the exact reverse of societies like the Japanese who have a strong saving culture.
If we are to make a sustainable change to this unfortunate behaviour, we need to be deliberate about financial planning and start celebrating frugality, saving and wealth creation. Our children deserve better and need us to model behaviour that will ensure a happy and prosperous future.

Grace Makoko is Standard Chartered’s head of financial markets, East Africa. E-mail: [email protected]