LYNCH

Claudia Lynch, Contributor

When earnings are small, you probably don't think about saving or investing. But, unless you make an effort to save and invest, chances are, it will never happen. Making this effort is called "Paying Yourself First."

Saving leads to financial literacy but requires discipline.

Choosing to be a diligent saver is of endless benefit but requires a lot of discipline. Besides the obvious money making possibilities, saving teaches an individual to become financially literate. Financial literacy can be interpreted in many ways but for this article I will focus on understanding how one either maintains or improves one's financial situation.

How is this financial literacy achieved? It is done through planning for the future, budgeting and investing to make your money work for you. When this is done you will likely increase your chances of financial success while reducing your chances of financial struggle later on in life. This means, therefore, that a good saving habit should begin with regular savings as early in life as possible. Delaying this habit will lead to many regrets and less benefits in the long run.

Where should you begin?

Early in life, it is important to make regular deposits into a savings account, while spending responsibly and investing wisely. Saving is the most basic step toward achieving financial freedom, therefore, one must begin this discipline at a young age. While the children are in school they should be taught financial independence, as this is the only way they will understand why it is important not to waste money.

Opening a saving account for the child and encouraging them to save some of their allowance will encourage discipline and excellent money management skills at a tender age.

Respecting money is a problem that plagues many children in the world today. Many people, especially teenagers, have no sense of financial responsibility and have no respect for money or its enormous power. They are not taught to appreciate how much work goes into earning money. Consequently, they spend endlessly without recognising how the spending extravagance affects their financial future and the future of their families.

On this subject, Ron and Judy Blue, authors of Raising Money-Smart Kids, write, "A dollar spent today does not take a dollar out of the future; it takes multiple dollars out of the future." Understanding this, encourages people to exhibit foresight realising that saving a little now can save a lot later.

Saving can be fun

Saving can be fun if you anticipate the future pleasures that it will bring, of course, it could be in the form of education for yourself or the children, paying off your mortgage, being able to retire in comfort, or even taking thoselong vacations you always yearned for. There is no doubt that when your income is low and inflation is high, saving is sometimes the last thing on your mind. You should, however, realise the importance and value of regular and planned savings. While it requires constant sacrifice and self-denial, the expectation of greater satisfaction in the future is worth the sacrifice.

If you don't already have a savings account, start one today and always remember saving is the first step to wealth creation. Always strive to be penny-wise, i.e. find use for your money that will increase your wealth.