“A penny saved is a penny earned.”
This
very old English proverb is often falsely attributed to Benjamin Franklin, the
remarkable 18th century American polymath who successfully combined
statesmanship with such diverse careers as science, invention, publication,
business, philosophy and philanthropy. He used it for the first time in 1758 in
his informative publication, The Poor Richard Almanac, to underline the
importance of saving as an integral part of living a good life. He was undoubtedly
the most talented of the Founding Fathers, and a major contributor to the preparation
and the acceptance of the Declaration of Independence. More than a
century later in 1863, he was honored by the nation with the placing of his
image on a one cent coin together with an imprint of the quotation.
There is also an equally appropriate old Arabic proverb on saving, which was originally passed on to me by my brother-in-law, Elias Faris. It has always impressed me because of its absolute clarity and sound wisdom. It advises:
“Save your white money for those black days.”
In saying this, it recognizes the truth that everything in life is subject to the fundamental changing laws of nature, fluctuating from favorable to unfavorable, and that our survival is often directly dependent on our ability to use the benefits derived in the favorable stages of our life to protect ourselves in times of need. Clearly, by actively setting aside a share of these benefits, we are taking steps to protect ourselves in the times that were black and less favorable. This indeed, is the fundamental reason for initiating a savings ideology. It goes well beyond the need to create an emergency fund to weather the storms in the future. It instead, can be viewed as a form of self-care and self-respect and as a reflection of the way we honor our future life.
The importance of instilling a culture of saving in the life of every community can never be understated. In fact, with such a long list of tried and tested benefits at every stage of life, it is undoubtedly one of the soundest habits to develop and to pass on. It is the single, most important habit which when consistently put into practice, ensures greater peace of mind, freedom to do as you choose, and plan more confidently for the future. A sound savings plan offers security and stress relief from unexpected situations, and the sense of freedom that comes from being in control of one’s life. In addition, successful savings planning has the added advantage of inducing feelings of well-being, good health and overall confidence in preparing for the future.
One of the greatest mistakes in trying to develop a culture of savings in our lives, is to believe that this must begin after we have satisfied our immediate needs, so that we in effect save our ‘left overs.’ But this approach unfortunately fails miserably in all but a few special situations. To be successful, requires the definitive development of long-term planning involving the integration of the current resources with the projected long-term needs. Warren Buffett, the enormously successful American business tycoon who is affectionately referred to by his large following as the Guru of Omaha, very effectively placed this in its right context when he emphatically advised:
“Do not save what is left after spending, but spend what is left after saving.”
In advising this, he was confirming that the habit of trying to save the funds that remain over after spending is satisfied is ineffective and give rise to problems. Savings instead, to be effective, must be the priority, so as to ensure that it will be available to serve you in the time of need. He insists that all other spending must be strictly limited one’s own personal needs, and never to match or compete with anyone else.
Contrary to the popular impressions, no one will deny the fact that current societies are built on a reckless spending mentality, where everything is done to encourage the use of all the resources available to satisfy the present, with little regard to the needs of the future. We are driven to compete with our neighbors and made to feel that we are ‘entitled’ to everything our hearts desired, without due regard to our real needs for the future. And even on those occasions when we are reminded of our duty to save for those times when the going gets difficult, we tend to delude ourselves in assuming that there is still time to deal with it later. Sadly, we ourselves are guilty of failing to truly recognize that this constant desire for short-term gratification is our greatest enemy, and it is preventing us from taking the right steps to achieve the true ‘freedom’ we all seek.
The importance of developing a savings philosophy is significantly more than just having money set aside. It should be approached as an integral part of life and given as much import and attention as one does in securing health, living and relationships. The logistics of correct savings cannot be left to chance and to the whims of others, but must be introduced, by word and by example, from an early age, and must be continued throughout one’s lifetime. It takes discipline to achieve financial security, and requires some degree of sacrifice, understanding and planning to ensure its growth and security. It is a serious mistake to ever assume savings are mainly needed for protection from those ‘rainy days.’ In fact, savings, judiciously utilized, is without question the single most important factor in securing a better quality of living during the later years. Indeed, Benjamin Franklin, in his truly boundless wisdom, tried to remind us of this vital role when he declared:
“By failing to prepare, you are preparing to fail.”
-This indeed is the true wisdom in savings. Like life itself, it will only be meaningful if we begin early, allow it to develop slowly, and avoid any of the unnecessary distractions that will interfere with its growth.
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