Saving Tips

 8 Best Ways of Saving for Investment

Although the culture of saving is crucial to attaining personal financial freedom, many people take it for granted due to various myths/wrong mindsets associated with it. 

Money speaks one language, "Save me today, I will save you tomorrow."

Key Questions

1. What is saving?

2. Why is it important to save?

3. What can one do to get money for saving?

4. Is it possible to save during this tough time of Covid-19?

5. What are the 8 best ways of saving for investment?

Meaning of saving

Saving refers to the practice of putting aside some percentage of your total income for emergency, investment, funding irregular expenses or retirement.

Investment means the process of making your money work for you i.e. mutiplying your savings, using a loan in an income-generating project or buying an appreciating asset.

N.B. You can use the 80/20 Rule to determine the amount to save according to your needs. It is known as "Pay Yourself First." That is, before spending your money, save 20% of your total income.

Importance of Embracing Savings' Culture

1. Mastering your money i.e. becoming financially disciplined and taking control of your money.

2. Helps you achieve your financial goals. 

3. Cushions you against any disaster/emergency.

4.  Helps you plan your future i.e. retirement.

5. Boosts your self-confidence and self-esteem.

 "Don't save what is left after SPENDING, but spend what is left after SAVING." Warren Buffet

How You Can Get Money for Saving

1. Setting SMART financial goals  (Strong WHY?) e.g. I will save Kshs.60k by the end of 2020 by setting aside Kshs.5k so that I can buy a cow, start rearing chicken, pay schools fees etc.

2. Cutting down unnecessary expenses by budgeting and monitoring your expenses daily, weekly and monthly.

3. Shopping in bulk instead of small portions. Looking for offers and discounts. Getting more value for less.

4. Paying off asap - avoid debt trap, consolidate & negotiate for affordable payment schedule.

6. Putting coins or loose change in a sealed jar/small container.

 "Money is only a tool. It will take you wherever you wherever you wish, but it will not replace you as the driver." Ayn Rand

8 Best Ways of Saving for Investment

1. Opening bank account e.g. Saving or fixed deposit account. Earns 7% interest and  safer than keeping money under mattress or house.

2. Opening a Mshwari Lock Saving account. Set timeline and target e.g. 100k in 12 months. Equally safer, earns 7% interest & accessible.

3. Contributing to Chama. If well run, it can give dividends & collateral for loan.

4. Contributing to a Sacco. Earns higher dividends, used a security for loan though inaccessible. 

5. Buying items for hire e.g. tents and chairs, sound system, handcarts, construction items or tools. Earns passive income.

6. Investing in gov't securities - T-bills & bonds. Earns about 10% returns, secure and less taxed.

7. Buying unit trusts e.g.  Money Market Fund, Equity Fund, Balanced Fund etc. Earns 8-10% interest and some are easy to liquidate (MMF).

8. Buying stocks/shares. High risk high return, dividends and capital growth/gains.

Parting Shot

1. It is possible to save during these tough times coz saving is a routine.

2. Let's avoid getting into the trap of debt. Don't borrow to consume but to invest in income-generating projects. Passive income.

3. Remember to have money talks with your family, learn how money works and how to increase your income so as to save more.

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