Afrika in Focus: Money Matters - Why Africans SHOULD cultivate a savings culture.

Financial literacy remains one of the most critical yet overlooked challenges facing African communities worldwide. As discussed in a recent podcast , the global cost of living crisis has only magnified pre-existing financial vulnerabilities across the diaspora, making the development of a savings culture not just beneficial but essential for survival. When looking at startling statistics from the UK, where 1 in 4 adults have no savings whatsoever and more than half the population has less than £5,000 in the bank, we begin to understand the scale of financial precariousness that many people—including those in African communities—are living with daily.

 Consider the example highlighted in our podcast: a professional woman in London earning a respectable £48,000 annually (approximately £2,900 after tax) who allocates £500 monthly for a brand-new Mercedes-Benz on finance. This decision exemplifies the financial illiteracy that plagues many in our communities—prioritizing depreciating assets over building financial security. As soon as you drive a new car off the lot, it loses value, transforming an already expensive purchase into an even poorer investment. Unless you're using that vehicle to generate income through ride-sharing services or deliveries, you're maintaining a liability rather than building an asset.

This pattern of prioritizing immediate consumption over long-term security creates a vulnerable lifestyle where people live "hand to mouth".

 Without emergency savings, any disruption—job loss, medical emergency, or family crisis—can trigger financial catastrophe. The solution, while not glamorous, is straightforward: develop a disciplined savings habit. No matter your income level, location, or occupation, putting aside at least 10-20% of your monthly earnings into a savings account creates a foundation for financial security. For someone earning £2,000 monthly after tax in the UK, this means setting aside £200-£400. In Ghana, even with a modest income of 3,000 cedis monthly, saving 200 cedis consistently builds a crucial financial buffer over time.

Beyond just having an emergency fund, these savings can serve multiple strategic purposes. They can provide collateral for loans, seed capital for entrepreneurial ventures, or investment funds for wealth-building opportunities like property or business ownership. Higher-yield options such as bonds, Cash ISAs in the UK, or stocks and shares can help your money work harder, generating passive income through interest or dividends. The discipline required to consistently save also develops crucial financial management skills that benefit all aspects of your financial life.

Chapters

• 0:00 Introduction to Money Matters
• 6:01 Financial Illiteracy Among African Communities
• 10:40 Living Paycheck to Paycheck Crisis
• 14:05 Developing a Culture of Savings
• 17:29 Income and Expenditure Analysis

Transcript

Speaker 1: 0:03

Good evening and welcome to this edition of Africa in Focus. Myself Kwame, ghanaian writer, broadcaster, historian, podcaster and entrepreneur. And this edition of Africa in Focus is looking at finance. So we're looking at why money matters and why black people need to develop a savings culture. So this is the first of two parts, for now we're looking at financial matters within the global black or African community.

Speaker 1: 0:39

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Speaker 1: 1:44

Alright, so let's get into this week's podcast looking about money and money matters, financial issues, specifically why African people globally must develop a seamless culture. Now you know we've had the recession, you know, in Ghana and other parts of the world, uk, uk, us we now have a slowdown in Europe and America, particularly with Trump's tariffs causing a bit of a commotion, and obviously, you know we are still in the realms in the middle of a global cost of living crisis. So it doesn't matter whether you're in Ghana, in Nigeria, in Canada, the US, uk, france, australia the cost of living is high everywhere, particularly since COVID, and so, given this, then, it is important for African people to develop a savings culture, savings habit, because, if we be honest with ourselves, african people are really financial literacy, and let me give you just one example of what I mean by this. I was listening to a podcast and they're talking about this woman's earnings. Right, and this is a woman that's living in the UK. She's earning not a bad salary, which is about £36,000, but out of that £36,000 she gets about. After tax, she's probably getting about. I think it's about £2,900 a month. Yeah, sorry, she's on £48,000 salary, sorry, £48,000 salary, which is which, after tax, is about £2,900 a month now. So living in London and rents in London are crazy, so their rent is taking about a good 30% of that.

Speaker 1: 3:53

But the mad thing about this woman is that she's buying a new Mercedes-Benz on car finance, paying a staggering £500 a month. Now why do you have to be paying £500 a month? Now? Why do you have to be paying £500 a month for a new car when, a you don't own your property, yeah, and B and B you don't have to buy a brand new car. You can buy a good used vehicle paying half that £500 that you're paying for this new car because a car.

Speaker 1: 4:27

Again, this is something that we don't know as black people, african people, right, the moment you buy a car, it depreciates in value. So if you buy a car for example, you buy a car 10,000 US dollars the moment you drive that car it is no longer worth $10,000. It's worth less than that. So the car depreciates in value unless you can use that car as an asset by either using it as doing Uber, a taxi or another thing that can make that liability an asset. So the car that you bought is a liability, but it can become an asset when you use it for things like Uber or delivery or that kind of thing. Yeah, but a lot of us, as African black people, we don't know that. So why spend £500 a month on a brand new car which is going to depreciate in value, when you can spend £200 a month on buying a decent car Could be a Peugeot, could be a Citroen, could be a golf car, etc. Yeah, so this is where, as black people, right the kind of financial illiterate and because of that, why we're not saving enough money for rainy day and for when you may lose your job.

Speaker 1: 5:52

Because in the UK it is stated that one in three adults have got no savings. Think about now one in three adults in the UK got no savings at all. So what happens if they lose their job? Hmm, and also it says that most people in the UK have got less than five thousand pounds in the bank. That is staggering. So one in three people in the UK adults in the UK have got no savings. And two more than half the UK population has got less than five5,000 in the bank. That is staggering. So just imagine you lose your job tomorrow. What's going to happen to you?

Speaker 1: 6:39

So many people right in the UK, us, canada, right, etc. Live basically from hand to mouth, paycheque to paycheque to paycheque. Yeah, so that's what they live on, that's what they survive on. Because of this issue about credit and credit also is not free money. Credit is not free money because if you buy, if you've got a credit card and you buy, for example, you pay for a holiday worth £4,000, £4,000, right, with that credit card, right, you've got to pay that back at interest rate. Yeah, so, rather than get a credit card out and you're going to pay interest on top of that, when you, when you make any purchase, right, why do you save money?

Speaker 1: 7:25

Yeah, so many African people around the world do not save money. Because we're not taught about these financial matters when we're young or when we're in school or whatever. When we leave university, when we start earning money. That's when some of us become, you could say, try to manage our money the best that we can but also because of the way we spend. Also, black people spend a lot of money, particularly on clothes and what have you buying fancy cars? A lot of us are not really having any savings, and so, for me, the whole idea of this podcast is to try and encourage our people to save.

Speaker 1: 8:15

So, for example, if you are in the UK and you earn, let's say, let's say, for example, two thousand pounds off the tax minimum, very minimum, you should be putting in a, you know, in savings at least between 10 and 10 percent of that 2 000 pounds. Easily, easily, yeah, because obviously you're paying for your rent, uh, you're paying your transport, your food and that kind of thing. But at least, yeah, despite that, at least you should be saving at least between 10 and 20 percent of that two thousand pounds. Put in a bank, yeah, put in some, put it in you know some kind of savings accounts where you're not going to trust that money. Yeah, same way, if you are in america and, as a tax, you earn about three thousand dollars a month, yeah, you should be putting at least between two and three hundred dollars a month into a savings account. Yeah, it could be a high-interest rate account. It could be a normal savings account where you've got interest about 1% or whatever it is right now. Or you can go on an online bank which offers more healthy interest rates, sometimes about 4-5%. You know you could make that money work for you rather than just spending the money and then say things like designing clothes and what have you.

Speaker 1: 9:41

Again, if you live in a country like Ghana where the pay is not too good, even if you earn something like 3,000 cities a month, 3,000 galaxies a month, you can at least put aside 200 cities a month, yeah, as some kind of savings or some kind of investment or what have you. Or put that money aside for rainy day, because you never know what's going to happen in life. Yeah. So we have to, as african people globally, right, we've got to develop a culture of savings. Yeah, don't spend all your money or your income at once, yeah, and be strategic in how you spend your money, as well as putting some of your money aside for emergency.

Speaker 1: 10:30

Say, for example, like say, if you lost a job tomorrow, right. And if that's some of that, if you accumulate your savings over a six-month period of time, nine-month period of time, one-year period of time, right. That money will cushion you. If you lose a job today, yeah. Same way, also, you may need the money for the emergency. You may have to, you know, seek private medical care, which can be expensive, no matter where you are. Yeah, you may need to pay for someone's funeral costs yeah, a family funeral costs. Or you know you may need to do something out of the extraordinary that will inquire you to spend a certain amount of money. Yeah, so that's why it's important to put some money aside for any day, because you never know what is around the corner. Yeah, and so you know, because emergencies do happen. So this is why you know this. Emergencies do happen. So this is why you know this podcast. We are encouraging you.

Speaker 1: 11:34

Yeah, it doesn't matter what job you do, it doesn't matter where you are in the world, it doesn't matter how much you earn to put at least between 10 and 10% of your monthly income into some kind of savings account. So it could be, you know, if you are in the US or Europe where interest rates are low, you could look at getting a higher yield account. So, for example, I know that in Europe, particularly somewhere like the UK, they've got bonds. They have bonds where you can earn up to 4% interest a year in some UK banks. Also, you've got Cat Aisha, where you can earn it to 4% interest a year in some UK banks. Also, you've got CashAisha, where you can put a certain amount of money each year, tax-free, into your account. Also, you've got things like stocks and shares.

Speaker 1: 12:23

You can invest the money in that, or you can just have that money sitting aside for you in your basic current account, which is often you know, depending on where you are maybe 1% or 2% interest at the end of the year. At least that money is sitting down working for you, right? Rather than you not having to say anything to it at all and just spending it on designer clothes, jewelry, you know expensive mobile phone, you know, a car that you don't really need, et cetera, et cetera. So by having that money there working for you, yeah, that money would be used, particularly in your businesses. Or, if you don't, if you are able to keep your job, yeah, and you're able to put, you know, between 10 and 10 percent of your monthly wage into a account over time over two years, three years that money can build for you, right, and you can even use that as collateral to get a loan, as well as use that as collateral to start your own business, as well as use that as collateral to invest in another business, could be a property, could be, buying a car for Uber, etc. And so I am endangering all our people it doesn't matter where you are on the planet to start developing a habit of saving.

Speaker 1: 14:01

Yeah, me personally, right, I put, at least I infer a quarter, yeah, a quarter of my money goes into, you know, a savings account that I've got in the UK. Fortunate enough for me, my rent is not too bad and because, also through time, that I've got in the UK, fortunately enough for me, my rent is not too bad and because, also through time, I've been able to develop money skills in which I'm very, very good at managing my money. And so, you know, I don't buy designer clothes for one yeah, I don't buy, for example, you know, £200 trainers or sneakers. Yeah, I don't go out to eat a lot yeah, I don't. I don't go out to um, a club or that kind of thing every week, so I'm very careful as to how I spend my money. So, so I get the um you know the essentials out of the way, and this is the way it's useful for you to do what we call an income and expenditure analysis.

Speaker 1: 15:03

Yeah, so, what you earn as opposed to, also, as opposed to what your outgoings are. So once you know your outgoings, yeah. So if you do an income and expenditure analysis, you've got your income, so I earn. Let's say, for example, I earn £3,000 a month off the tax Now these are venture analysis. You got your income, so I earned. Let's say, for example, I earn three thousand pound a month off the tax. Now these are my outgoings. My rent is 500 pound a month. You know my. If I got a car, I'm paying 200 pound a month. You know my shopping is about, you know 250 pounds a month. You know my lighting, you know, is about 40 pounds a month. 50 pound a month. Yeah, my lighting is about £40 a month, £50 a month.

Speaker 1: 15:37

So by doing this way, you'll get an idea as to what your outgoings are. So you may have Netflix subscription, you may have gym subscription, you may have a phone contract. So once you've got a rough idea as to what your expenditure is, and if your expenditure exceeds your income, then you're going to see those problems. However, that is enough, because once you are able to identify your expenditure, then you can make a critical analysis of where to cut down your expenditure. So you can ask yourself do I really need that Netflix subscription. Do I really need that yourself? Do I really need that netflix subscription? Do I really need that, or do I really need to spend? You know if, particularly if I'm a woman, do I need to spend 150 pounds a month on my hair or do my nails, yeah, or do I really need to spend 300 pounds on car finance a month?

Speaker 1: 16:36

So these are ways and means that you can analyse and look to try and reduce your expenditure and put some of that excess money in some kind of savings account in which that money can work for you, as opposed to you working, or as opposed to you just working and just paying your bills, and at the end of the month you've got nothing, no savings at all.

Speaker 1: 17:05

And so, in wrapping up, in closing, it is important for us, as a people, globally, to develop a culture of savings. Yeah, because saving is a very, very good habit to have, because it can help you be financially disciplined, it can help you in your financial goals and, more importantly, it can help you to become more financially literate and also to become more financially secure, as opposed to not being financially disciplined and spending all your money and, at the end of the day, you've got nothing to show for it. Okay, and so I hope you found this financial news series that we're doing called Finance Matters Money Matters, part one. In part two next week we're going to look at, you know, about African people's shopping habits and why we've got to spend our money within our communities rather than spending our money with other communities. Alright, so until next week. Thank you for myself, kwame, and for all the crew here on African Focus. Thank you very much for listening and we'll see you.