Saving habits: cultural factors are decisive

By Zubeida Mustafa

Pakistan’s saving rate betrays its people’s weakness for spending. The nation manages to save only five per cent of its gross domestic product — a figure much lower than in most other Third World countries. The saving rate in India is 20 per cent. It’s 30 per cent in Indonesia and 28 per cent in China and Nigeria.

But in spite of their notoriety for ostentatious living and wasteful habits, it is wrong to think that people in this country do not set aside any of their earnings for the proverbial rainy day. And those who do not manage to save despite their best efforts worry about their inability to save.

Why save? This might appear to be too obvious a question to ask. But it gives you an insight into people’s attitudes. For instance, people generally do not speak about providing something for their retirement — that is if they are not prompted to do so. Probably that is too distant an event for most working people to worry about.

People are more-concerned about the money they need for their son’s education, daughter’s marriage or a house of their own. Of course, the priorities depend on a person’s own circumstances and his background.


These priorities, however, point to the social and cultural values of people in Pakistan. A daughter’s wedding is generally a costly affair. Even education has come to acquire new significance — maybe not from the point of view of learning and its mental and intellectual dimension, but its economic and functional utility.

Today even people with no education aspire to educate their children, at least the boys. Of course, their aspirations might not be as ambitious as those of a highly educated person but it is certainly a new and happy trend that people have begun to save for their children’s education.

But it is significant that one rarely comes across a person who saves for a social cause. Most people must have a tangible material goal before them to be motivated to curb their impulse to spend to the last penny they have in hand.

And this goal, if it is not one of those mentioned above, is invariably personal and material — an item of basic need or luxury for personal use such as a car, an airconditioner, a coloured television, a VCR or the like. People generally don’t feel any responsibility towards society. Hence there are few if any who save and donate for a social cause.

As an economist points out, the standard of living is so low and the suppressed demands so many that the majority of the people has to struggle to satisfy its basic need of food, shelter and clothing. Then social and cultural values are so distorted that those who are well above the poverty line are not contented with what they have. So their wants become unending. As such there is no one with money to spare for social responsibilities.


The main reason why we are considered to be poor savers is because of our attitude towards this matter. Very fey/ people consider it to be mandatory to save. It is mainly those in the high income or the low income group who begin by deducting the amount they plan to save from their earning and then spend the balance. They first determine the size of the cloth they wish to cut their coat from.

Neemat Bibi who does domestic chores to earn Rs. 600 a month sets aside Rs. 250 every month. Since she subscribes this amount to the “beesi” of which she is a member, her monthly subscription is a question of honour for her. This provides an element of compulsion and she deducts her savings from her income even before she begins to spend.

Mr. Rahim, an accountant in a private firm, also invests at the beginning of the month what he plans to save. Thus his take home salary has been considerably reduced. “But I have started doing this only recently after resolving to do this for years,” Mr. Rahim admitted. “I hope I can keep it up.” The more usual practice is for people to spend their earnings and put aside whatever is left over as their saving. This, of course has disadvantages — budgetting is difficult and a person cannot be certain about how much he-will be saving. Very often his bank balance is nil by the end of the month. Mr. Ahmad, a librarian in a research organisation, says he does not manage to save anything in spite of his best effort. He has drawn up a budget and at the beginning of the month he keeps for himself and pays his wife and his parents the amount which has been decided upon. That leaves nothing to be saved. Not only is he living from hand to mouth, he is also invariably overspending because the two bonuses he receives are also drawn from the bank and spent during the course of the year. His only saving is his provident fund which in any case is beyond his reach. Mr. Ahmad feels that he is not able to save because of the high cost of living and inflation. Faruq Seth, a small businessman who owns a warehouse in Lea Market which he rents out for a living, finds it impossible to save. “Things are costly now,” he complains, “Look at the price of ata, ghee and other edibles. After all you have to eat to live. How can one save when one cannot earn much and you have to spend on the essentials?” But, Mr. Rahim points out that saving is basically a matter of priority as also of self-control. There are few people who can resist spending the money they have in hand. Hence, people try to force themselves to save by putting some amount beyond their reach.


For instance, they would buy securities or certificates. “There is a gentleman I know,” observed Mr. Rahim, “who-‘makes it doubly sure that he cannot touch his savings by borrowing from a bank to buy securities and then authorising the bank to deduct the loan instalment from his salary at the beginning of every month.

There are others who borrow and buy a house or a car and then they repay the loan. Thus they save by creating in effect a liability for themselves and then repaying it. Rather than save and then buy something, they reverse the process — they buy and then save to pay the loan. But without the element of compulsion people feel unable to save.

With the major chunk of a person’s income being channelled into household expenditure, one might well wonder if women are a decisive factor in determining our saving habits.

I found that they play hardly any role in promoting savings. Many of them handle no money at all. Thus, Faruq Seth does all the shopping, including clothes and chappals for his wife. He decides what soap she is to use, which vegetables are to be cooked and how much is to be spent on the furniture.

Hence he gives no money to his wife since she can conceivably have no financial needs which the husband will not attend to. Neemat Bibi is slightly better off probably because she is a wage earner herself. But even she hands in her salary to her husband, a worker in the Security Printing Press, who gives her a personal allowance. This she spends on her paan tambakoo and bus fare. The food and other household expenses are borne by her husband. In the instances where wives are handling money, their choices are limited. Invariably the husband gives her an allowance from which she spends on food, school fees, clothes and other such items. Since she feels that her budget has no provision for savings, a wife usually does not feel obliged to save. For instance, Mrs. Rahim says that the allowance she gets is so closely tailored to her household budget and the prices are rising so rapidly that she can barely manage to keep even. In fact, every now and then she has to ask Mr. Rahim for more money because she runs short of cash. Whenever she is able to save, she spends the money saved on the house. An important aspect of the saving habits of people — at least from the economist’s point of view — is where do people keep their savings. Neemat Bibi puts her saving in the “beesi” This is an extremely informal and personalised system under which people pool money together and then draw lots to decide who gets the amount. Under the “beesi” to which Neemat Bibi subscribes Rs. 10,000 are collected every month with each member paying Rs. 500. Sometimes two people join together to pay for one share. An elderly gentleman of the nighbourhood who is trusted by all keeps the account.

Source: Dawn 3 August 1984