“Jamaicans who save can not only support the achievement of their individual goals but can contribute to the wider economy in a number of ways,” says Gillian Jackson, senior manager at The Jamaica National Group.
Ms Jackson, who is also a financial blogger, says persons who save, contribute towards funding larger investments and enables banks to lend and make funds available for the growth of economic activities. Her advice comes as the world observes October 31 as World Savings Day.
“When you save, the money that you put in your account is used by the bank to lend to other persons and businesses. The money can also be channeled into investments in various sectors of the economy, such as infrastructure, technology, and research and development. These investments stimulate economic growth and job creation,” she explained.
She added that when persons save, it reduces Jamaica’s reliance on foreign capital, making the economy more resilient. Ms Jackson noted that savings can also act as a cushion during economic downturns, as people and businesses with savings are better equipped to weather financial crises without resorting to government assistance, therefore, reducing the strain on public resources.
How Savings Benefit Individuals
Ms Jackson says some life goals, such as financial, personal or educational, cannot be achieved without saving.
“Think about any goal you currently have – buying a house, getting a new car, completing a master’s degree. All of these will require some savings to either get started (for a down payment) or to fully fund. Saving is the steppingstone to the achievement of any goal,” she informed.
Noting that savings provides financial security by creating a safety net in case of unexpected expenses, such as medical emergencies or job loss, she says that this security can reduce stress and improve overall wellbeing.
Ms Jackson stated that saving is also essential for wealth-building, assisting persons to acquire appreciating assets such as a home, and education, and it also helps to support one in their retirement years.
Additionally, she noted that savings can also generate interest or investment income, which increases the overall wealth of the individual. This additional income, she says, can be used for various purposes.
“Saving can take us through all the stages of our life journey. Saving can take us out of poverty by investing in education and skills and improve our standard of living over time. It can allow us to finance our life goals and then eventually all of us want to stop working and retire in our beach front property. We won’t be able to do this without saving and investing,” Ms Jackson shared.
She shared seven ways people can cultivate the habit of saving:
- Set Clear Personal and Financial Goals:- Define specific financial goals, whether it’s an emergency fund, a vacation, a home, or retirement. Having goals gives you a purpose to save.
- Create a Budget: – Develop a budget that outlines your income and expenses. This will help you identify areas where you can cut costs and allocate money to savings.
- Automate Savings: – Set up automatic transfers, standing orders or salary deductions to a savings or investment account. This “pay yourself first” approach ensures that you save before spending.
- Track Expenses: – Keep a record of your spending to identify unnecessary expenses and areas where you can cut back.
- Create an Emergency Fund: – Build an emergency fund to cover unexpected expenses, such as medical bills or car repairs, without resorting to high-interest debt. Save 4 – 6 months of your salary to cover these expenses.
- Diversify Investments: – Consider investment options like stocks, bonds, and mutual funds to make your savings work for you through compounding and potential returns.
- Seek Professional Advice: – Consult with a licensed financial advisor to create a savings and investment strategy tailored to your financial goals and risk tolerance.