According to a study published by KPMG in 2020, one of the largest global accounting firms, Saudi family savings are declining due to an imbalance between rising income and expenses. When we look at the figures between 2007 and 2018, we find that family income increased by 5.3%, while their expenses rose by 38.6% during the same period, a significant discrepancy.
Could you be contributing to this decline in savings? The numbers also showed that after the world recovered from the coronavirus, spending rates increased much higher than previous years. This demands that we seriously reconsider certain matters.
Seriously Consider Saving For Retirement
When we become accustomed to certain standards in our lifestyle, it’s hard to give them up, especially if they are sources of comfort and luxury. We experienced this during the COVID-19 pandemic when we couldn’t go out or travel for leisure. The retirement scenario is similar; we’ll have to forgo many standards for biological reasons beyond our control and for financial reasons that we need to address early on. Preparing for retirement is a long-term project. It requires a clear vision that we’ll gradually reach over time, but planning needs to start today.
Seriously Consider Investing
Known income management percentages suggest that 50% of a salary should be allocated to essentials, 30% to luxuries, and 20% to savings. However, it’s not enough to just set your money aside. It needs to be invested to grow in value. Relying solely on your income as a money source is impractical since it might not always be consistent or guaranteed. This underscores the importance of investing to make additional funds that will help you save for emergencies, retirement, or to fund your own projects.
Seriously Think About Your Consumption Motives
Do you buy items you don’t need or discard shortly after? Do you have items at home that you don’t use? This indicates that we’re not seriously considering the motives behind our consumption behavior. Behavioral economics explains the psychological, cultural, and social dimensions of our sometimes irrational consumption decisions. For instance, if a product is priced at 300 Riyals and then discounted to 150 Riyals, we’re more inclined to purchase it compared to if it were priced at 150 Riyals from the start, without considering other factors like quality.
Seriously Think About Your Time
This article can be summarized by the concept of “time utilization”, which directly reflects on your financial routine, spanning your income, expenditure, savings, and all financial decisions. If you exercise, for instance, your stress levels might decrease, lessening the role of a negative mood in making poor purchasing decisions. Or if you read to enrich your financial knowledge, you’ll become better acquainted with sound financial management principles, thus enhancing your saving abilities. Conversely, spending too much time on social media might lead to increased spending on new items. Isn’t it said, “Time is gold”?
The Key
We mentioned it at the beginning of the article, and we return to conclude with it, for it represents the beginning and the end of every successful financial endeavor. The word is “thinking”. To use it to unlock the doors of financial stability, monitor your thoughts, discuss them, recognize the sources influencing them, and keep refining them. Only then will your financial life be governed by ideas that propel you forward.”
