Kudzanai Sharara Taking Stock
Global Money Week (GMW) is an annual global awareness-raising campaign on the importance of ensuring that young people, from an early age, are financially aware, and are gradually acquiring the knowledge, skills, attitudes and behaviours necessary to make sound financial decisions and ultimately achieve financial well-being and financial resilience.
Being financially literate will help children and young persons learn the culture of savings and ultimately, assist them to build a lifetime of financial well-being and financial independence.
Organised by Organisation for Economic Co-operation and Development (OECD), the Global Money Week Campaign is said to have reached over 53 million children and young people in 176 countries worldwide. This is over nine editions, starting in 2012. So this year is basically the tenth year the campaign has been running.
This year, the running theme is “Build your future, be smart about money.”
However, “Learn.Save.Earn.” is the official slogan of the Global Money Week. The slogan conveys the key messages of the GMW Campaign and supports the goal of the Week by empowering children and youth to not only learn to manage their money wisely, but save for their futures and earn for themselves and their families.
This week on Business Focus, a radio programme on CapitalkFM, where I am a resident guest, I shared my knowledge, skills, attitudes and behaviours when it comes to money.
On Tuesday, on the radio programme, I shared my early memories about money and the lessons I learnt while helping my mother sell fruits and vegetables at the market.
The first lesson is probably the fact that to earn money you have to work for it. You must have a business idea that you have to execute.
For my mother the idea was to go buy fruits and vegetables in bulk at a wholesale price, break them down into smaller quantities and sale, at a profit. So the second lesson was probably the skill to price products not only at a profit but competitively.
If you put a huge mark up on products, customers would simply go to the next stall. Also if you put a small mark up to woo customers, you also risk toiling for nothing. So the idea is to strike a balance that allows sustainability, profitability and competitiveness of the business. So that was lesson number one from my mother, work to earn.
The third lesson I learnt from my mother is that when you make profit, don’t spend it all in one place. “Don’t spend it all in one place” is a humorous phrase said when one is given money, especially an insignificant amount of money. Profits from selling fruits and vegetables at the street corner are not that significant.
They are very small. But for my mother no matter how small the profits were, a certain percentage had to be saved.
She would save for a year or two to buy her kitchen needs, pots, pans and the kitchen unit itself. The aspect of saving is vital. It provides financial security and freedom and secures you in a financial emergency.
It is necessary that we remind ourselves of the importance of saving money regularly as this is crucial for everyone, regardless of their earnings, spending and life stage. For my mother, saving would help her make that big purchase.
Larger purchases, like the Kitchen Unit my mother bought back in the day can be costly.
Putting together that kind of money is not easy. So while it might not be the case every time, big purchases are the reasons savings are important in the long run.
Savings also give you a better future. Savings can be the answer to a number of goals including accumulating funds for retirement, for children’s education, and even just a peace of mind.
Knowing that you have a certain amount accumulated for times of your need, gives the peace of mind as you will not have to struggle if things take an unexpected route.
The third aspect covered by the Global Money Week’s slogan as stated earlier is “Earn”. Selling fruits and vegetables with my mother, back in the day, was a valuable way of earning income. This type of income, among many names is known as active income. But it’s not the only one.
There is also what is known as passive income. Unfortunately, it’s a lesson I did not get from my mother. She probably didn’t know about it. In fact, till today she might still carry that ignorance.
Had she known, she probably would not have saved all her money in a piggy bank or by being part of Mukando, which is basically an Internal Savings and Lending (ISAL) initiative when individuals, typically women, come together as a group and pool an agreed amount of money regularly, but with no interest earnings for both methods.
Had she known she could have invested some of it on the stock market and earn what is known as “passive income”. Passive income provides residual income with minimal time and effort. It can improve one’s personal finances and give the freedom of time.
One way of earning passive income is to invest on the stock market. Investing in the stock market is basically having money work for you so that you can fully reap the rewards of your labour in the future.
Warren Buffett defines investing as “the process of laying out money now in the expectation of receiving more money in the future.”
Although the stock market might have a steep learning curve and can be confusing, it’s a great way to build lasting wealth. Though it comes with its own risks, investing in the stock market is the most common way for beginners to gain investment experience.
Although my mother taught me about actively earning money and saving it too, I wish she had taught me about stock market investing too.