How Thinking Affects Our Savings and Investment Decisions

By Arthur Moses Opio @arthurkmo

“When you have money on your bank account, you are not thinking. Take the first step, it's like bathing cold water, once you start you wonder why you were fearing, take the first step, it gets easier with time, invest in CISs. The gains are more than what you lose.” said Timothy Kalyegira - Former CEO, Capital Markets Authority (CMA).

I once posed a question to a friend I mentor: 'What do you know about money?' Her answer was as simple as it was profound: 'You earn it, and you save it.' Recognizing the opportunity, I sparked a discussion with her on the concept of investing money, specifically through Unit Trust funds and XENO Uganda, chosen for its innovative use of technology and low barrier to entry at just UGX 10,000 (less than 3 USD).

Caught off guard, she admitted she was unfamiliar with the subject but was eager to learn. By the end of our conversation, she was determined to venture into this new financial realm. As I reflected on our interaction, I realized how our understanding of finances is deeply rooted in what we've been taught from an early age.

If you grow up in a home that has nothing to do with financial education, then that’s all you will know and have. This insightful encounter with my friend illuminates the kind of mindset ingrained in many of us from childhood: obtain an education, secure good grades, and get a job. The idea of investing remained foreign until I introduced her to the Unit Trust funds.

Renowned author Harv Eker once stated, "Thoughts lead to feelings, feelings to actions, and actions to results." This could certainly be said for financial management. If all one has ever known is investing in banks, convincing them to try riskier methods can be challenging, mainly if they've previously lost money in scams.

This lack of trust is commonplace among Ugandans when dealing with money markets, However, ongoing awareness campaigns have increased participants engaging with financial establishments like the Capital Markets Authority (CMA).

Since quite a number of Ugandans have been scammed, when you talk about Unit Trusts funds and them being licensed by Capital Markets Authority, they will tell you, “Those online things are scams. Don’t put your money there. I was scammed by Telexfree, Development Channel, BLQ and the most recent Capital Chicken.” I believe that attitude continues to make Ugandans trust doing their investments only in banks, real estate and business. The alternatives of the money markets are not yet fully trusted but with continuous awareness, the numbers keep growing (Client accounts increased from 56,787 in March 2023 to 66,188 by end of June 2023(CMA)).

We all form habits based on our early environmental influences. A lack of financial education during our formative years fosters a culture of impulse buying and inadequate planning. Consequently, this becomes a constant pattern; the words we utter and the culture we adopt unveil our cultivated habits or deficiencies.

Notably, during the COVID-19 lockdown, it was disclosed that only around 19% of the population could manage themselves without income. These individuals, characterized as "thinkers," prioritize investments over savings. However, a report by the Bank of Uganda highlighted that 58% of Ugandans weren't mindful of their spending habits.

James Allen's well-known saying, "As a man thinks in his heart, so is he," encapsulates the root of our beliefs. Much of our conditioning about money has been imparted to us either verbally, through modeling, or due to specific incidents.

Typical phrases such as "money doesn't grow on trees" and "investing is for the rich" have been deeply embedded in our collective subconscious, shaping our beliefs and attitudes towards wealth accumulation.

Looking at most of our upbringing, our money beliefs were shaped through verbal programming (what we heard), modelling (Monkey see, Monkey do), specific incidents(what happened to you.) - Some of us reading this either heard money isn’t grown on trees, rich people are evil, investing is for rich people, etc.

To substantiate the point of verbal programming, This is what T. Harv Eker says,

“I recalled in that when I was young, each day after work, my dad would sit down at the dinner table with the newspaper, check the stock pages, slam his fist on the table, and shout, ‘Those stinkin stocks!’ and that he spent the next hour ranting about how stupid the whole system is and how you have a better chance of making money playing the slot machines in Las Vegas.” 

He further said, “Now that you understand the power of verbal conditioning, can you see that it’s no wonder I couldn’t make any money in the stock market? I was literally programmed to fail, programmed to unconsciously pick the wrong stock, at the wrong price, at the wrong time. Why? To subconsciously validate my money blueprint that said, ‘Stocks stink.’”

To conclude, changing the way we think through education can alter our habits and redefine our investment paths, enabling us to seize endless financial opportunities beyond what we knew as children.

Arthur Moses Opio is the End User Administrator at the Directorate of ICT Support (DICTS) at Makerere University. He has over 10 years of experience in system administration from different organizations, where he developed expertise in directly interfacing with end users to optimize the institution's knowledge base and user online experience. He completed a Master of Computer Science majoring in Security at Makerere University. He is passionate about personal finance and writes a blog on thoughts to Transform, Impact and Empower lives in the area of personal finance, personal development and leadership.

Alex Kakande