Savings according to Wikipedia is income not spent, or deferred consumption. Methods of saving include putting money aside in, for example, a deposit account, a pension account, an investment fund, or as cash. In other words keeping part of my earnings/salary for future use in the bank, with any co-operative society, joining contribution with friends or trade partners or storing the money in a piggy bank is seen as savings.
There are several reasons why many Nigerians are unable to save money towards retirement, investments, education, buying a house, a car, towards a wedding, a vacation, charity or gifts for extended family members and so on. Nigeria is cash based economy; that means that in Nigeria, we do almost all transactions with cash. So saving money in a bank is still a new culture to majority of Nigerians. We use raw cash to pay for a car, a house or to build one, to buy electronics, furniture etc. In other words we use almost all of our hard earned money to pay for long term purchases and in the end; we are left with almost nothing.
6 Reasons Why Nigerians Are Not Able To Save:
1. Not Enough Money To Save: Many workers complain about underpayment; and if you are a government worker, you will understand very well what I am talking about. Those in private sector also have issues with their meagre earnings while the unemployed say they cannot save. Business owners say businesses are not booming while the farmers are protesting that their products are not appropriately priced. So the much that one has is used for day to day running expenses, leaving you with nothing to save.
2. Lack Of Education: A great number of Nigerians lack education, especially financial literacy and there is so much ignorance on subjects such as financial management and banking activities which include opening of bank account, depositing money in the bank and the benefits of such activities etc. Persons struggling with basic educational issues such as reading and writing can hardly be concerned with understanding how financial institutions operate.
3. No Access To Banks: Many times banks are located in places where majority of people do not have easy access to them, especially in the rural areas where banks are located far from the people due to poor infrastructural facilities in these areas. . The very thought of travelling just to deposit money in the bank discourages people from taking that option.
4. No Clear Federal Government Policy On Social Security: There is no clear law in the country that makes it compulsory for every person that earns a living to contribute a certain percentage of their income towards retirement. If such a policy exists and stipulates penalty for defaulters people will see the need to save.
5. Cost Of Living Is So Low: In Nigeria especially in the rural areas, the cost of living is so low that most of the villagers can go through life without any savings. Health care services and basic education are almost completely free where they are available. Over 70% of Nigerians live in remote areas where tertiary education is not a priority, so they do not bother to save towards that. Also, Africans tend to give birth to too many children and the number one reason why it is so is because most parents hope that their children would cater for them in old age. This way, children become their insurance when they retire and saving for retirement is therefore not most peoples’ priority. Majority of people however, fail to factor in eventualities such as health challenges and other circumstances which might make it difficult for their children to bear this responsibility alone despite their willingness to do so.
6. We Live For The Moment: In this country we tend to live for thepresent we follow the lifestyle of the Joneses and forget that there will be a tomorrow. Everybody likes the latest cars, machines, big houses, eating at the best eatery in town etc. We love big parties and all these take chunks of money which will not allow us to save.
If we as a people want to cultivate the act of saving money, we must do away with so many things that we spend our monies on.
Do you know other reasons why Nigerians do not save money? Share with us.