Amid the ongoing economic challenges in the country, saving money has become increasingly difficult.
However, setting aside funds is not only wise but also essential for achieving financial stability.
In 2022, Ghana experienced a surge in inflation to 54 percent, which significantly affected the incomes, salaries, and livelihoods of many. Although inflationary pressures have somewhat eased in 2024, with the rate at 20.9% as of July, saving remains a struggle for many people.
Maximizing savings requires strategies to reduce expenses, optimize budgeting, and make informed financial choices. This involves steps such as smart investing, maintaining financial discipline, cutting back on non-essential spending, prioritizing debt repayment, and taking advantage of discounts.
When effectively applied, these methods can help individuals build a financial cushion and enhance their financial stability, even in the face of economic uncertainty.
GhanaWeb Business, in this article, provides a step-by-step guide that can help you develop a simple and realistic strategy for saving.
Record your expenses
One of the first steps to saving money is to figure out how much you spend. It is essential to track all expenses incurred, including regular utility bills, household purchases, and more. Keeping a record of your expenses on paper, a notebook, or a tracker app can help track your daily or monthly expenses.
Create a budget and include savings
Once you have enough information about how much expenses you incur within a month, you can begin to create a budget relative to your income. This can help you plan your spending and limit overspending.
It is important to factor in expenses that occur regularly but not every month, such as miscellaneous or unplanned spending like car maintenance etc. Once you have a fair idea of this, you can eventually plan to save an amount that feels comfortable to you.
You can also ramp up on your savings by setting aside about 15 to 20 percent of your income per month.
Deliberately cut down on spending
To maximise your saving goals and consolidate gains made, it is vital to trim down non-essential spending. This could include activities that are not immediately important as you look for ways to save on fixed monthly expenses such as water and electricity bills, car insurance, entertainment, etc.
One major way of trimming down non-essential spending is to ‘Wait Before You Buy’ as you may realise that the item or activity was wanted rather than needed, giving you the space and time to plan towards it.
Set realistic saving goals
One of the surest ways of saving is by setting realistic saving goals in the short to long term (one to three years). Setting these goals could help you estimate how much money, time, and how long you will need to save towards that goal or purchase.
Outline your key financial priorities
Priorities they say differ for every individual as it is important to put things into perspective by order of priority and make the needed push for savings and investments towards that priority.
Finally, you could put money aside for the future, but be sure to remember long-term goals and planning are important to give you a clear idea of how to allocate your savings.
KPMG’s latest report has shed light on a notable shift in the savings habits of certain Ghanaians, reflecting a growing inclination to preserve the value of their incomes.
As per the findings outlined in the report, the combination of double-digit inflation and the devaluation of the cedi has contributed to a surge in living expenses, especially in crucial sectors like food, housing, and transportation.
Furthermore, a vital debt restructuring effort aimed at securing an IMF bailout has resulted in diminished confidence among local investors, triggered by losses experienced by bondholders.
In unison, these elements have forged an unpredictable macroeconomic terrain, presenting a challenge to the purchasing power of consumers.
Thirty-five percent of respondents indicated savings and investments as one of their top priorities – the third highest, highlighting a resilient savings behavior despite economic pressures.
Notably, 92% of respondents affirmed their commitment to saving.
“However, only one in five is able to set aside more than twenty percent of their income, signaling that rising costs have eroded disposable incomes. In response to this challenge, some Ghanaians have turned to saving in foreign currencies to safeguard the value of their money” it stated.
In this year’s research, KPMG West Africa, delved into customer spending habits to understand their financial priorities. The findings unveiled that food (62%) and transportation (40%) stood out as the primary expenses for respondents.
These categories align with inflation drivers in Ghana, such as food prices and transportation fares, particularly fuel prices. Consequently, consumers have strategically adjusted their spending patterns and embraced various strategies to optimise their budgets for long-term savings.
18 to 25 years spend more on food, airtime and data
Similar to their Nigerian counterparts, the research revealed the spending patterns of individuals aged 18 to 25, indicating significant allocations to categories such as food, airtime & data, transportation, education, and personal care.
To foster loyalty among these young customers, it stressed that banks could consider implementing reward programmes linked to specific transactions or spending thresholds. This could involve offering complimentary airtime, discounts on ride-hailing services, or vouchers for frequently visited restaurants and food vendors.
Such initiatives could enhance customer retention and engagement within this demographic.
“For more affluent banking customers, those earning over ¢20,000 monthly, our survey found that their primary expenditure focuses on savings and investments. Remarkably, approximately 81% of these customers save over 20% of their income, while around 43% allocate more than 20% towards investments.
This presents an opportunity for banks to provide tailored investment guidance to assist these clients in preserving their capital amidst competing financial demands” the report stated.
Meanwhile, consumers are adapting to manage their expenses by embracing alternatives, such as opting for more budget-friendly brands. Additionally, there is a noticeable shift in household spending priorities from non-essential categories towards essential ones.
According to the report, these are the top five spending categories in Ghana
Minority Leader in Parliament, Dr. Cassiel Ato Forson, has leveled accusations against the Bank of Ghana, alleging the closure of over 400 microfinance institutions purportedly affiliated with the opposition National Democratic Congress (NDC).
He further claimed that some of the managers of these 426 microfinance companies, which were shut down for political motives, have resorted to working as taxi drivers.
Ato Forson asserted that if the NDC regains power, they will hold the Akufo-Addo government accountable for these actions.
During his address at the OccupyBoG demonstration in Accra on October 3, 2023, the former finance minister emphasized that the protest aimed to bring about improvements in the country.
It is worth noting that in 2017, the Bank of Ghana conducted a cleanup operation that resulted in the revocation of operating licenses for eight banks, 23 savings and loans companies, and over 400 specialized deposit-taking institutions (SDIs).
These included UT Bank, Capital Bank, Sovereign Bank, Beige Bank, Premium Bank, The Royal Bank, Heritage Bank, Construction Bank, and UniBank. The Receiver for some of these institutions found that many directors had failed in their fiduciary duties to customers and other stakeholders.
These measures taken by the BoG were aimed at safeguarding the investments of 4.6 million depositors.
Retirement may seem like far away, but saving for retirement now could mean the difference between enjoying life comfortably or battling to survive in your retirement years.
Saving for retirement isn’t only for those nearing their twilight years. Preparing for your retirement now, no matter your age, with these few tips can be the difference between really enjoying yourself and just getting by.
Saving for retirement
Start now Start saving and planning for your retirement ASAP. The sooner you start, the more you’ll save: don’t underestimate the power of compound interest.
You can always increase your contributions when more cash is freed up later on.
Automatic contributions Make your retirement contributions automatic each month. This way you’ll grow your nest egg without having to think too much about it.
Stay informed If your company doesn’t already offer you a pension or provident fund, there are many other tax-savvy savings and investment options you can take up or add to your retirement plan. A retirement annuity (RA) is one of them, as is a Fixed Deposit investment account.
Diversifying your investment portfolio and spreading your funds across different assets, sectors and even geographic regions can also help your funds grow. Periodically reassess your portfolio. This will help ensure your retirement plan is on target.
Pay off your debt It’s easier to save for your retirement when you don’t have any other debts looming overhead. By the time you’re ready to retire, try to have all your major debts such as car and home loans paid off.
Don’t touch your savings Cashing in your retirement savings early will cause you to lose interest as well as any tax benefits, you may even have to pay withdrawal penalties. If you change jobs, consider re-investing your retirement savings in your current plan, or roll them over to your new employer’s retirement fund.
Speak to a professional Before making any commitments, speak to a financial planner to know all your options as well as how to boost your existing plans.
Source: standardbank.co.za
DISCLAIMER: Independentghana.com will not be liable for any inaccuracies contained in this article. The views expressed in the article are solely those of the author’s, and do not reflect those of The Independent Ghana
Whether you’re in your 20s or your 50s, personal financial planning around wealth building and risk cover are critical. Here’s what you should consider at key stages of your adult life.
How much money is enough for you to be secure? When it comes to investing in your future, a little can go a long way. It all depends on when you start budgeting for the life you want to live.
“People in their 20s, 30s, 40s and 50s have different savings needs,” says David Cumming, Wealth Manager at Standard Bank. “It would help to consult a financial planner about your investments because there is no generic answer.”
Saving and achieving returns on your money doesn’t guarantee financial freedom when you retire. Setting aside enough today will determine your lifestyle in retirement, as well as the age you’ll be able to retire.
Do you know how much you will be able to live off and how long your capital will last? According to Cumming, reaching your retirement goal is predominantly reliant on three things: time, real return and contributions.
Student loan debt, car repayments, bond deposits and wedding costs are just some of the financial obligations that can delay saving for retirement. But the trick is to start as soon as you can and to save as much as possible.
financial tips for your life stage
This guide includes savvy tips for all stages of your adult life:
Smart financial moves in your 20s
Financial discipline in your youth yields significant advantages later in life, and the sooner you start building your wealth, the better. Consider minimising your debt and your expenses, while maximising savings. You can do this by living with your parents while you save for a deposit on your own house, instead of moving into a rental property and paying a landlord.
Retirement may seem far away, but the earlier you start saving, the more compound interest you will accrue. Automated deposits are easy and effective because they take money directly from your pay cheque and put it where you need it – into a savings account. This will help you become accustomed to saving early on.
Savings and investing in your 20s
Short and medium-term savings:
Savings for a car
Savings for a home
Savings accounts
Tax-free savings account
Unit trusts
Long-term savings and investments:
A retirement annuity can benefit you massively if you start early.
The percentage saved from your salary when you’re 20 years old will increase exponentially, compared to the percentage of your salary saved from when you are 35.
If you begin investing in your 20s, you can build an investment portfolio with a higher risk tolerance for higher gains over time – this can have a significant impact on your ability to begin building wealth in your 20s and beyond.
Property investment affords you the benefit of assets that appreciate over time, plus the long-term advantage of low repayments in relation to higher inflation in future.
Insurance in your 20s
Consider getting cover for younger people who do not yet have dependents, including:
Medical cover or a hospital plan to cover unexpected health expenses.
Disability cover to ensure you’re earning an income even if you can no longer work.
Vehicle and asset cover to replace your car and household contents.
Smart financial moves in your 30s
In your 30s, you might be moving up in your career, starting a business, buying a home, getting married or growing your family. By now, you probably have a financial plan in place, either with the help of a financial planner or through your own research. Being in your 30s still gives you enough time to plan and save for the future. By focusing on a few key points, you can manage your finances better and ensure that you keep the future in mind.
Here are three key tips for maintaining financial control:
Budgeting is just as important as managing your expenses; at this time in your life, commitments such as buying a property and covering family-related costs will continue to mount.
Reducing expenditure on flashy cars, clothes, and entertainment will allow more to be invested in your property or savings.
As your assets and family grow, estate planning and a Will are essential. You also need to focus on fostering strong financial discipline in your children and establishing shared financial goals with your spouse.
Savings and investing in your 30s
Short and medium-term savings:
Set up an emergency fund to avoid unexpected expenses from throwing you off budget
Save for your children’s education
Savings accounts
Tax-free savings account for you children
Unit trusts
Long-term savings and investments:
If you haven’t begun saving for your retirement, now is the time to commit to an annuity and make regular payments. Commit as much as you can to your RA – your future self will thank you.
There are only 30-something years and fewer pay cheques than in your 20s until retirement at 65.
Your investment portfolio can still accommodate higher risk tolerance, resulting in high gains over time.
If you can, pay off a higher rate on your home loan to save you years in interest, and give you more cash to invest.
Insurance in your 30s
Beyond medical cover and disability, life cover is essential if you are concerned about ensuring loved ones and dependents are covered should you pass away.
If you are a homeowner, building and household contents cover is vital.
Funeral cover is an addition that should not cost you too much but will benefit your family a great deal.
Smart financial moves in your 40s
In your 40s, the reminder to save and invest for the future should be top of mind. You’re heading into your peak earning years, but your time horizon is shrinking. As your expenses and commitments mount, budgeting becomes more important. You are probably still paying off your bond, and you may also have to cover family-related costs:
If you have dependents, life cover is vital.
Saving for your children’s education is a priority.
Your Will needs to be reviewed regularly to ensure your estate planning is up-to-date and takes into account life changes such as marriage, children, divorce and changes to your assets and investments.
Savings and investing in your 40s
Short and medium-term savings:
Set up an emergency fund and aim to have at least three months of expenses covered
Review your education savings for your children, as increases in education prices are often higher than average inflation
Savings accounts
Tax-free savings account
Unit trusts
Long-term savings and investments:
If you haven’t begun saving for your retirement, start immediately.
There are at least 25 years and a limited amount of pay cheques until retirement at 65.
Use any bonuses you receive to boost your retirement savings.
How to build wealth in your 40’s? You may wish to consider a portfolio allocation and management method aimed at balancing risk and return.
Consider additional property investment.
Insurance in your 40s
In addition to medical and disability cover, life cover is critical in ensuring your loved ones and dependents are covered should you no longer be around to look after them.
If you are a homeowner, building and household contents cover should be a priority.
Funeral cover is an important addition to these policies.
Smart financial moves in your 50s
Many people get serious about planning for their retirement in the 50s. Financial planning in this decade is hugely important. This is the time to take a thorough look at your future and make some decisions. Review your financial plan to ensure you are on track. It’s important to assess your tolerance for risk-taking and to avoid making bad money choices. Although you may be taking care of older parents, don’t forget about saving for your own retirement.
It’s also wise to review your estate planning regularly, ensuring all information is up to date and accurate.
Savings and investing in your 50s
Short and medium-term savings:
Your 50s should be a time for reaping the rewards of your hard work. Consider savings for the following:
Holidays
Grandchildren
Paying cash for a vehicle
Long-term savings and investments:
If you haven’t begun saving for your retirement, start now by scaling back all expenses to supplement your contributions. You have approximately 15 years until retirement at 65, so use any available funds to boost your retirement savings.
Review your risk exposure in your investment portfolio as you have more to lose at this stage, and it could take longer to recoup losses from risky investments.
You should be aiming to pay off property, so you have fewer expenses leading up to retirement.
Insurance in your 50s
Maintain your medical insurance, as it’s costly to join a plan at this age after interrupted cover.
Ensure your home, its contents and your vehicle are insured, and the premiums up to date.
Funeral cover is a good addition, albeit later in life.
Source: standardbank.co.za
DISCLAIMER: Independentghana.com will not be liable for any inaccuracies contained in this article. The views expressed in the article are solely those of the author’s, and do not reflect those of The Independent Ghana
Over the years, SMEs have continued to play a vital role in Ghana’s socio-economic development- creating employment opportunities, fostering innovation and entrepreneurship, boosting economic growth, skills development and capacity building among others. Despite their significant contributions to the Ghanaian economy, many small businesses face a number of challenges including lack of infrastructure, limited access to markets, inadequate entrepreneurial skills and knowledge, lack of institutional support and most importantly, limited access to financing.
In sub-Saharan Africa, most SMEs fail as a result of lack of support from government and limited funding opportunities by traditional banks. In Ghana where we predominantly operate a traditional banking model, SMEs face barriers in securing adequate funding for their operations and expansion. This is largely as a result of the perceived problems in financing small firms have significantly hindered the role they play in the overall macroeconomic performance of the Ghanaian economy.
Despite these barriers and other inherent challenges that continue to affect SMEs, there are still a number of ways SMEs can access funding opportunities in Ghana through various channels. Here are some ways SMEs can access funding in Ghana:
Personal investment – For many entrepreneurs and business owners, they rely on personal savings and investments to fund their businesses. Before you venture into entrepreneurship, you need to have capital you can inject into the business during the first few months and years.
Loans from friends & family – This is the second go-to alternative for small business owners. Small business owners who are looking for funding also rely on family and friends for support in the form of loans. Sometimes, depending on the nature of the business, some friends and family will also decide to give funds in exchange for equity or some stake in the business.
Venture capitals & Angel investors – Angel investors and venture capitalists provide funding in exchange for equity or share of the business. These investors are mostly interested in startups and high growth potential businesses. In Ghana, there are angel investor networks and venture capital firms that invest in promising SMEs.
Credit Line or Overdrafts – A credit line also referred to as line of credit is a financial arrangement between a borrower and a lender that establishes a maximum borrowing limit. It is a pre-approved amount of money the borrower can access on an as-needed basis. Unlike a traditional loan where the borrower receives a lump sum upfront, a credit line allows the borrower to withdraw funds as required, up to the specified limit. Normally for an SME to access a line of credit, the SME will have to have operated for more than 3 years, and have the relevant records and documentation to access a line of credit.
Commercial banks & Financial institutions – Several banks in Ghana have loans which are designed for entrepreneurs and business owners at competitive rates. Many banks have specialized SME units or departments that cater to the funding needs of small businesses. Some banks also have dedicated desks which are focused on providing women business owners with funding opportunities, technical assistance, capacity building among others. In order to access funding opportunities from banks, it is critical to have a solid business plan and financial projections when approaching banks for funding.
Microfinance Institutions – Microfinance institutions (MFIs) provide financial services, including small loans, to individuals and small businesses that may not meet the requirements of traditional banks. They usually have more flexible lending criteria as compared to traditional banks and promotes financial inclusion by being more accessible for SMEs in remote areas.
Business Competitions & Grants – There are various grants that SMEs and business owners can apply. SMEs can participate in business competitions and apply for grants offered by organizations, both locally and internationally. These competitions and grants often focus on specific sectors and provide funding, mentorship, technical assistance and networking opportunities to beneficiaries. Organizations like Mastercard Foundation, Tony Elumelu Foundation Entrepreneurship Programme, GIZ among others.
Government and Development Agency Programs – Government and development agencies provide funding programs specifically designed for SMEs. These programs provide financial assistance, grants, and loans to support business growth. These include the National Board for Small Scale Industries (NBSSI), the Export Development and Agriculture Investment Fund, and the Venture Capital Trust Fund.
Private Equity Funds – Private equity funds mobilize money from institutional investors and high-net-worth individuals to invest in businesses. SMEs with a strong growth potential and a well-defined business model can approach private equity funds for funding.
Crowdfunding Platforms – Crowdfunding platforms allow SMEs to raise funds from a large number of individuals or investors who contribute small amounts. This approach can be particularly effective for businesses with a unique product or an innovative concept. Several crowdfunding platforms operate in Ghana, such as FundRise Ghana and Oasis Capital.
Development Partners and NGOs – International development partners, such as the United Nations and non-governmental organizations (NGOs), may offer funding opportunities for SMEs. These organizations often support projects that align with their social, economic, or environmental goals.
When seeking funding opportunities, it is critical for SMEs to conduct extensive research and fully understand the requirements and conditions of each funding source. Having a comprehensive business plan, financial statements as well as other supporting documents that may be necessary to demonstrate the viability and potential of their business. It is also important to invest in networking and building relationships with industry associations, business support organizations, and mentors who can provide valuable connections and insights into funding opportunities in Ghana.
Providing more funding opportunities for SMEs can go a long way to strengthen infrastructure, enhance business support services, promote entrepreneurship education and training, and create an enabling policy and regulatory environment can help unlock the potential of SMEs in Ghana.
>>> Ramat Ebella Whajah is a Banking Executive with over a decade experience in Business Advisory, Sales, Customer Service, Branch Operations among others. She is the Founder of Girls with Purpose Foundation, a not-for-profit community passionate about mentoring young girls and the youth to find their purpose, standout and succeed. Connect with Ramat via LinkedIn: Ramat Ebella Whajah , Email: rammy_48@yahoo.com
