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On The Money: Demystifying secrets of money management

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As people all over the world are talking about savings and making investments, Malawians, deep into the 21st Century continue to make baby steps towards attaining financial literacy and good money management practices.

A 2008 Finscope survey made startling revelations among them that close to 45 percent of Malawians lack financial awareness with only 19 percent of the population having access to banking services. It also showed that only a mere three percent of the population has access to insurance services.

In an attempt to coax more and more people to become banked and develop a culture of saving, we have seen financial institutions in the country running various promotions and competitions with appealing grand prizes as the country races against deadline to have 40 percent of the population banked as agreed in the national financial inclusion strategy.

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According to the Reserve Bank of Malawi, informal data from a baseline survey that the central bank conducted few years back shows that even though the country may not achieve the target as agreed, steady progress has been made with now close to 30 percent of the population being banked.

It is against this backdrop that one of the country’s financial services provider, Old Mutual, introduced it’s “On The Money” programme to enhance financial education. The program and encourage a culture of saving among Malawians aims to while at the same time demystify underlying myths about money that influences people’s ability to use, grow and protect their investments.

On The Money unpacks the big five secrets of money management based on a study the company did some three years ago involving the big five animals found across Africa namely the elephant, the buffalo, the leopard, the rhino and the lion.

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It says the unique characteristics of the lion, elephant, buffalo, leopard and rhino, as found in nature, have been distilled to teach Malawians secrets about how to manage better their personal and family finances.

The programme is billed to help Malawians, of any income earning ability, to manage their money better. On the Money shows

the direct link between individual saving habits and national prosperity and growth.

But, is there any link between how much a person earns and how well they can manage their money?

In an interview, Old Mutual Financial Education Facilitator Bernard Chiluzi said that there is no connection between what one earns and their money management abilities.

“That is good news for everyone. It means that despite our earning levels, we can all learn good money management habits and we can all aspire to a good level of financial security,” he said.

“I can’t save!” Many people often cry out. Their argument is that there is nothing left to save at the end of the month. But according to Chiluzi, not being able to save is one of the biggest reasons why some people don’t become wealthy.

What can we learn from the lion?

Most people understand that they need to save and some do save a little bit at the end of the month whenever they can but, according to Chiluzi, this often doesn’t work as there always seem to be other expenses that eat into this amount.

“The first secret of the big five, the secret of the lion turns this behavior around and says save first ahead of all other expenses, and not last, out of my leftovers. Like the lion, which eats first ahead of the pride (group), you should pay yourself first and save a fixed amount each month,” he said.

He added that saving should be an automatic deduction taken from a person’s pay, before they start paying other expenses.

“By looking after your saving needs first, you are securing the future of your pride-family,” he said.

In securing the future of their family a person can be shielding them from the effects of a sudden job loss, death or unexpected medical bills, among others.

Chiluzi said savings should not only be a priority but also automatic if Malawians are to change their saving habits.

“You need to decide on a way that automatically deducts the money from your account at the beginning of the month and transfers it into a savings account or other investment,” he said.

Creating a financial plan

Starting a savings plan is a goal that has made its way on many people’s New Year’s resolutions lists but only to tumble and fail a few months into the New Year. Many people’s savings plans, according to Chiluzi, fail because the goals are too vague.

“The secret of the leopard is very simple: learn from the leopard and have a very clear idea of what you are saving for. Saving isn’t easy. You need a vision-something really inspiring to keep you on track when times are hard,” he advised.

The secret of the elephant: Knowledge is power

According to Chiluzi, under the secret of the lion, Old Mutual teaches that a person should have a clear understanding of their monthly expenses vis a vis what they earn.

“Proper record keeping will help you understand your spending habits better. It might surprise you to see how much you actually spend on items such as transport, lunches, cell phones et cetera. Once you have recorded what you actually earn and spend your money on, you can plan how to change your spending habits to suit your income and future goals,” he advised.

He added that budgeting is a skill everyone can learn.

Secret of the Rhino : Charging down on debt

On the Money also teaches the skill of tackling debt which is the most serious threat to any long term wealth creation plan.

“The secret of the rhino teaches you to face your debt head-on. It tells you to charge down your biggest threat to financial stability-debt. Learn from the rhino-charge down your debt as fast as you can!” he said adding that people can also learn from the buffalo to protect their assets and make their money work for them.

Old Mutual is currently offering On The Money trainings to individuals and groupings interested to enhance their money management skills free of charge.

To learn more about investments, savings and insurance, tune in to Times TV on Monday at 7:30pm and Times Radio on Tuesday at 4:00pm with repeats on Thursday at 4:00pm on TV and radio Fridays and 4:00pm.

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