Why Black Fri­day De­feats Fi­nan­cial Free­dom for Zam­bian Con­sumers

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Sav­ings Habits – Save Now and Reap In­vest­ments Later

I won­der what kind of spend­ing and sav­ings habits I would gain by just look­ing at the in­come and ex­pen­di­tures of the peo­ple that par­tic­i­pated in the Black Fri­day. Would you say most these Black Fri­day spenders came from two in­come house­holds, are high ear­ing self-em­ployed en­trepreneurs, were renters, are home own­ers, have saved up money for per­sonal emer­gency (sick­ness/fu­neral), ed­u­ca­tion for the chil­dren, and re­tire­ment, live om bud­gets and came from high pay­ing jobs or well to do.

The very no­tion of sav­ing is ac­tu­ally pred­i­cated on the good habit of pay your­self first. Be­fore you spend and give away your hard-earned money, pay your­self first by putting away a por­tion of it in the sav­ings ac­count. It is very too late to start sav­ing. Sav­ing is a guar­an­teed good habit that leads to fi­nan­cial suc­cess and free­dom and can be done by any­one. The good thing with sav­ing is that it could be at­tained by short-term or long-term goals. Ad­di­tion­ally, there are so many sav­ings ac­counts de­pend­ing on your short-term or long-term goals. Stan­dard char­tered Bank of Zam­bia has Sav­ings ac­count (med­i­cal re­im­burse­ment), Ju­nior Mil­lion­aire (for child’s fu­ture) and Fixed Ac­count ( guar­an­tees re­turns). Here is a chart of how eas­ily one can eas­ily break the bad habit of spend­ing into a good habit of sav­ing: Our Zam­bian rich live op­u­lently, whereas most in­cred­i­bly wealthy peo­ple like Mark Zucker­berg, War­ren Buf­fet and the Oba­mas live fru­gally — and we as Zam­bian con­sumers and as na­tion can learn some­thing from them.

Pro­tect­ing Habits: Guard Your Fi­nan­cial As­sets

Most of Zam­bians are taught from child­hood to help our rel­a­tives fi­nan­cially. It is the pin­na­cle of our ubuntu cul­ture. But many Zam­bians fail to re­al­ize that own­ing fi­nan­cial as­sets comes with huge re­spon­si­bil­ity and can be a curse, in­stead of a bless­ing, due to mis­use of fi­nan­cial as­sets. Christ­mas sea­son with ex­pec­ta­tions to send money to ex­tended rel­a­tives or even help­ing out friends or even co­work­ers can also prove to be fi­nan­cially and emo­tion­ally bur­den­some. Thus, I be­lieve that the less peo­ple know about what you own or are worth the bet­ter, af­ter all only you know what sac­ri­fices it took to gain fi­nan­cial free­dom. Be­fore spend­ing or choos­ing to give your hard-earned money, it is im­por­tant to eval­u­ate the re­la­tion­ship with the per­son you are help­ing. If the per­son has money prob­lems (drink­ing prob­lem) maybe it is bet­ter to help them in­di­rectly by meet­ing their needs ver­sus giv­ing the money. Whether as Zam­bian con­sumers or a na­tion, fi­nan­cial prob­lems do not come from lack of money but rather from mak­ing poor fi­nan­cial de­ci­sions. As can be at­tested by the cur­rent IMF ne­go­ti­a­tions with Zam­bia, un­til fi­nan­cial mis­man­age­ment is­sues are ad­dressed, no money will solve con­sumer or na­tional prob­lems. I fol­low this rule of thumb, un­less I have rea­son­ably weighed the pros and cons of the risk that comes with own­ing or dis­pos­ing a par­tic­u­lar as­set, I will not par­tic­i­pate in the trans­ac­tion like Black Fri­day. How well you re­late to your fi­nan­cial as­sets says a lot about your fi­nan­cial well­be­ing or free­dom.

Bor­row­ing Habits – Know the Cost of Credit

Stuff hap­pens in life and in some in­stances, it’s nec­es­sary to bor­row. I wouldn’t be sur­prised if some peo­ple that showed up on Black Fri­day ac­tu­ally bor­rowed money from rel­a­tives or friends. Again, it goes to how well you un­der­stand prin­ci­ples of li­a­bil­i­ties and as­sets. Bor­row­ing money to pay for pur­chases like ed­u­ca­tion, a house, car for business use or maybe even to meet un­ex­pected ex­penses, is fi­nan­cially ac­cept­able. Get­ting a loan to pay for a car for lux­ury is the waste of money, af­ter all a car by def­i­ni­tion is a li­a­bil­ity in­vest­ment that loses value. To me a car should be used to meet your trans­porta­tion needs and not as a sym­bol of fi­nan­cial sta­tus. The rule of thumb when it comes to bor­row­ing is, don’t bor­row money to buy stuff to im­press peo­ple who don’t care about you or you don’t know. Don’t bor­row un­less it is ab­so­lutely nec­es­sary and what you in­vest in will in­crease the value of your in­vest­ment like a home or ed­u­ca­tion. Our Zam­bian rich live op­u­lently, whereas most in­cred­i­bly wealthy peo­ple like Mark Zucker­berg, War­ren Buf­fet and the Oba­mas live fru­gally — and we as Zam­bian con­sumers and as na­tion can learn some­thing from them.

Pro­tect­ing Habits: Guard Your Fi­nan­cial As­sets

Most of Zam­bians are taught from child­hood to help our rel­a­tives fi­nan­cially. It is the pin­na­cle of our ubuntu cul­ture. But many Zam­bians fail to re­al­ize that own­ing fi­nan­cial as­sets comes with huge re­spon­si­bil­ity and can be a curse, in­stead of a bless­ing, due to mis­use of fi­nan­cial as­sets. Christ­mas sea­son with ex­pec­ta­tions to send money to ex­tended rel­a­tives or even help­ing out friends or even co­work­ers can also prove to be fi­nan­cially and emo­tion­ally bur­den­some. Thus, I be­lieve that the less peo­ple know about what you own or are worth the bet­ter, af­ter all only you know what sac­ri­fices it took to gain fi­nan­cial free­dom. Be­fore spend­ing or choos­ing to give your hard-earned money, it is im­por­tant to eval­u­ate the re­la­tion­ship with the per­son you are help­ing. If the per­son has money prob­lems (drink­ing prob­lem) maybe it is bet­ter to help them in­di­rectly by meet­ing their needs ver­sus giv­ing the money. Whether as Zam­bian con­sumers or a na­tion, fi­nan­cial prob­lems do not come from lack of money but rather from mak­ing poor fi­nan­cial de­ci­sions. As can be at­tested by the cur­rent IMF ne­go­ti­a­tions with Zam­bia, un­til fi­nan­cial mis­man­age­ment is­sues are ad­dressed, no money will solve con­sumer or na­tional prob­lems. I fol­low this rule of thumb, un­less I have rea­son­ably weighed the pros and cons of the risk that comes with own­ing or dis­pos­ing a par­tic­u­lar as­set, I will not par­tic­i­pate in the trans­ac­tion like Black Fri­day. How well you re­late to your fi­nan­cial as­sets says a lot about your fi­nan­cial well­be­ing or free­dom.

Bor­row­ing Habits – Know the Cost of Credit

Stuff hap­pens in life and in some in­stances, it’s nec­es­sary to bor­row. I wouldn’t be sur­prised if some peo­ple that showed up on Black Fri­day ac­tu­ally bor­rowed money from rel­a­tives or friends. Again, it goes to how well you un­der­stand prin­ci­ples of li­a­bil­i­ties and as­sets. Bor­row­ing money to pay for pur­chases like ed­u­ca­tion, a house, car for business use or maybe even to meet un­ex­pected ex­penses, is fi­nan­cially ac­cept­able. Get­ting a loan to pay for a car for lux­ury is the waste of money, af­ter all a car by def­i­ni­tion is a li­a­bil­ity in­vest­ment that loses value. To me a car should be used to meet your trans­porta­tion needs and not as a sym­bol of fi­nan­cial sta­tus. The rule of thumb when it comes to bor­row­ing is, don’t bor­row money to buy stuff to im­press peo­ple who don’t care about you or you don’t know. Don’t bor­row un­less it is ab­so­lutely nec­es­sary and what you in­vest in will in­crease the value of your in­vest­ment like a home or ed­u­ca­tion.

Spend­ing Habits: Know the Value of what you are buy­ing

I am not against shop­ping on Black Fri­day as long as fi­nan­cial com­mand­ments of price com­par­i­son and strict ad­her­ence to the bud­get are ob­served. Like I said be­fore spend­ing money on stuff to keep up with the Mu­lenga’s or to im­press the girl/boyfriends is sim­ply al­low­ing the emo­tions to get lost in the clut­ter of con­sumerism/ma­te­ri­al­ism. With a well thought out an­nual shop­ping strat­egy lead­ing to Black Fri­day, it is eas­ier to find best sav­ings on bar­gains. Un­less you can ac­tu­ally prove math­e­mat­i­cally, don’t set­tle for the sale price. Re­mem­ber re­tail­ers aren’t stupid and are not in the business of giv­ing way deals. A heav­ily dis­counted price on a cheap item might be a deal now but will cost you more in re­pairs and fixes. With re­spect to heavy spend­ing on Black Fri­day, the ques­tion I have for Zam­bians is, how many con­sumers spent their money sup­port­ing Zam­bian owned com­pa­nies or small busi­nesses? We are al­ways look­ing to politi­cians to cre­ate jobs, but yet the fact is more money was spent to sup­port for­eign owned cor­po­ra­tions (Game-Walt Mart) that Zam­bian-owned busi­nesses. And we won­der why we limit eco­nomic growth to our­selves-it’s be­cause of bad spend­ing habits and not good fi­nan­cial habits. As the hol­i­day shop­ping sea­son heats up with Black Fri­day as its high­est gear, the spend­ing data might be good for fi­nan­cial econometrists to grade Zam­bia as a mid­dle­class na­tion. But from a purely con­sumer fi­nan­cial lit­er­acy and na­tional eco­nomic free­dom, Black Fri­day just proved one thing-we are our own worst en­e­mies as Zam­bian con­sumers, as we would rather spend money to sup­port for­eign owned cor­po­ra­tions than sup­port Zam­bian-owned busi­nesses and small en­trepreneurs. With proper fi­nan­cial lit­er­acy Black Fri­day should have been more about Zam­bian to Zam­bian eco­nomic em­pow­er­ment by cre­at­ing and ex­pand­ing eco­nomic op­por­tu­ni­ties to each other, than load­ing carts with stuff. It is this kind of fi­nan­cial il­lit­er­acy and bad spend­ing habits on stuff with no as­set build­ing po­ten­tial that that keeps us poor and limit eco­nomic growth in our com­mu­ni­ties, and per­pet­u­ally shack­les us in fi­nan­cial bondage. By Mr. Ce­cil Nsam­bila Mbolela- A Zam­bian-Amer­i­can, a na­tive of Mu­fulira, with the Fed­eral Re­serve Bank of Chicago, IL USA. I work in the Credit Rik Man­age­ment/Pay­ment Sys­tem Risk depart­ment, and I am a Fed­eral Re­serve Sys­tem (FRS) Am­bas­sador in the Money Mu­seum. As a (FRS) am­bas­sador, I give talks to Grad­u­ate stu­dents and mu­seum go­ers on the role of cen­tral bank­ing in the USA. I do also par­tic­i­pate in the Money Smart Week a pro­gram of the Re­serve Bank which helps con­sumers man­age their per­sonal fi­nances bet­ter. The pro­grams are of­fered to all de­mo­graph­ics and in­come lev­els, and cover all facets of per­sonal fi­nance.

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