How To Save
There are a number of ways that one can use to create a substantial amount of saving for them. The rule of saving is one and its quite simple “Pay yourself first, live of the rest”. Those who make the habit of ensuring that they have a plan where their savings is deducted from their income before expenses have a solid plan.
Let’s have a look at some of the saving methods available to Kenyans.
The mattress method
This one of the old methods that were used by our grandparents but this was before the era of banks, Chamas and the stock market. It’s a highly risky venture with a very uncertain outcome. The money could be lost in a very easy ways like fire or even being stolen, besides the money has absolutely no chance of growing- even if you add folia feed to it. Even if the money is not lost the temptation to use it for personal expenses is quite high. After all is said and done this method doesn’t pass the “wisdom meter”.
The Chama method or merry -go- round
The Chama or the merry go round is a method that is very unique to Kenya. It’s akin to the investment clubs of the developed world only that most of the early Chamas were by peasant mothers. The strength of this method in terms of savings depends on the structure that the members decide to take. Registered and well-structured Chamas have a better chance of helping not only save but also grow your money on the other hand poorly structured ones will waste your effort. It’s important to that group members understand each other well enough to trust them with their cash.
Savings Account method
Most people will tell you this is the sure way to start your saving. It will work well if you have standing order on your account that syphon the money to your saving account well before you start spending it. The standing order method works well for those who receive a money cheque. The other people who work their asses off to rake a living need a disciplined mind. You will have to get yourself to putting in something each time you receive any cash. This method will allow you to put aside small amounts that will eventually accumulate to a substantial amount in future.
Unit Trusts
It involves investing in the stock market through a proxy that accumulates money from a number of people. Those who understand this method say it’s a good one to use but rather risky. The idea usually is to capitalize on the strength of numbers. The risk comes due to the volatility of the stock markets.
Fixed Deposit Account
Investing in fixed deposit account requires one to have some lump sum that they can put a side for some period of time usually a fixed period thus the name fixed deposit. The set back here comes if you happened to need your money before the end of the fixed period.
Government treasury bills and bonds
The government has two solid saving methods that are available to the common public. One can do bonds with are usually long term and require some huge sum to put in. Treasury bills on the other hand are short term. Both instruments have a fixed interest rate and can be very lucrative when the market (lending) interest rates are high too.
