Grace Agada: How to Save Big and Double Your Cash Reserves

One of the biggest mistake employees make is to tie wealth and financial success to the size of their pay cheque. True wealth does not come from having a big pay cheque.  The foundation for true wealth is saving – that is, the ability to keep a sizable part of one’s income every month. Saving is important because it is the only thing that protects a person’s income from total loss. Money spent is money lost; it is only savings that preserves a person’s financial security. Yet every year, thousands of employees struggle to save. They pop money out before money even gets in and they suffer enormous financial stress.  The reason for this is simple: we live in a society that praises emotional spending and shames rational savings.

Emotional spending is any kind of financial decision that puts savings behind bars. That is, it treats savings as a leftover item that is considered only after all expenses have been made. Rational saving puts savings at the forefront. It considers nothing else until savings is set aside. Rational saving is thus the only kind of financial decision that leads to financial success. All active income will end at some point in a person’s life. The only source of income that will last for a lifetime is savings. The smaller the savings, the shorter it will last. When employees make savings an optional or meager item, they end up becoming a burden at the end of their careers. As family members stretch their finances to help them, they put their own savings at risk. This is the reason for the continuous cycle of poverty in most families. As long as employees keep sacrificing their own financial security, and descending from an asset to a liability at the end of their career, the cycle of poverty will continue.

So, What Can Employees Do?

To break the cycle of poverty, employees must maintain their asset status throughout life. The only way to do this is to keep a major part of their income and invest it wisely. No matter how much employees earn, they can find ways to save and in fact, there is money to be saved. Rational savings is the only way to pull out money from all the wrong places it is hiding and end the cycle of poverty forever.

What is Rational Saving?

Rational Saving is keeping a major part of your income for yourself. It is protecting the seed you need for your own financial security. It is also ensuring that you remain independent throughout life and thrive in a turbulent job market. Although society shames this kind of savings and calls it selfish. It is the right thing to do. Rational Saving is a sign of self-love, it is proof that your emotions are under control. When you save rationally, you choose your own financial security first so you can become a lifelong asset to your family. Saving rationally does not mean abdicating family responsibilities. It means separating emotional spending from rational financial decisions. Everyone does emotional spending from time to time. If you were to lose your job today and be out of a job for the next year, what would you change about your current spending pattern? There is always something to change.

Recently, we conducted a survey to find out how working-class professionals make financial decisions. The purpose of this survey was to separate the emotional decision people make from their rational financial decisions. Here are some of what we found:

100% of those surveyed spend less than 20% of their income on themselves. This means that they spend their entire life working and investing in the lives of other people. A few of them have leftover savings and some have zero savings. When asked what they think was responsible for success, we got responses like prayer, a higher income, luck, and connection. Some of the people surveyed have burnt their life savings sending their children abroad with the hopes that they will turn out successful. Others believe their fancy degrees, expensive certifications, and good grades will create success. As nice as these things may seem, none of them can create true success.

True success does not come through prayers; prayer without savings is dead. It has little to do with good grades or best schools; the traditional school system does not teach success or money. That is why putting school fees ahead of your own financial security is not a wise decision, you may eventually have nothing when you retire, have nothing your children can inherit and may still become a burden to them. The same way high income does not lead to success. Many employees have had several promotions, salary raises, and bonuses with little impact on their financial stability. The only way to achieve true success is through rational savings. The ability to set aside a sizable amount of your income each month. Without this simple fundamental principle, employees cannot create the wealth of their dreams.

How can you save rationally?

To save rationally, you need to practice, be accountable, and join a community of like-minds. Rational savings is not popular and so it’s hard to do it on your own.

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