Many countries around the world seek to promote savings among citizens. Savings help countries in the development of domestic projects, as opposed to countries which rely on external borrowing to finance their infrastructure projects, which are sometimes prone to political and economic pressures along with the obligation to bear significant annual interest on outstanding debts.
Japan, China, Singapore, Taiwan, Korea and some other Asian countries were able to make headway in domestic savings. Looking closely at the Japanese experience in savings, a popular art of saving money called (Kakeibo) pops out among 130 million occupants of Japan. It is a traditional way to help people change their consumer habits and prioritise them, especially if their income is not enough for all the monthly needs and commitments.
Moreover, this method aims to help families save money through rationalisation of consumption and setting monthly targets. It depends on the classification of daily and monthly expenses (such as rent, food, transportation, dining out, in addition to paying the usual monthly obligations such as electricity, water and telephone). The family then classifies these expenses as necessary or recreational.
When it comes to China’s savings experience, this country applies a myriad of savings schemes to its 1.3 billion population, achieving an astronomical savings rate of 55 per cent of GDP in 2010. This means that no country in the world has achieved these levels of domestic savings.
For each dollar generated in China, 55 cents are saved, according to some experts, despite the current pressure of the trade war with the United States.
Meanwhile, the rate of domestic savings in the United States in 2010 did not exceed 14.2 per cent of GDP, meaning that for every dollar generated from GDP, only 14 cents are saved. The US believes that the high rate of savings in some parts of the world, like China and oil-exporting countries, contributes to the large deficit in the US current account, as well as the imbalance in international payments system (as a result of non-use of these savings for import or foreign investments).
People save money to provide a comfortable life and cover expenses for themselves in the future, especially for healthcare, travel and investment, or to secure their life after retirement if they encounter rainy days. Consequently, some use banking institutions to deposit their savings, while others use money boxes for this purpose, as seen in some Asian and African countries.
It is therefore our duty as GCC and Arab nations to adopt savings as a habit that cater to our current situation by encouraging children and women to start saving money, especially with the availability of banks and financial institutions which offer many benefits with their savings schemes.
In the past, money boxes were the most common way to save money for many people, and still proves to be widely popular and successful today. When the Japanese began applying this method, they were surprised by the amount of money they had saved in their money boxes in just few weeks, especially cash saved for cancelled plans, like dining out.
More people in the Arab world are moving towards borrowing and landing in debts, which creates an obligation for them to pay back with interest. They then enter the vicious cycle of debt, which they could have avoided by building up cash from savings to use in dire need.