Most people struggle to save money, myself included. We live in a world where there are limited resources and unlimited wants.
However, cultivating the habit of saving is a very important culture that can help you achieve your financial freedom and be able to realize your goals easily. They always say that a good saver can save money for business, be debt free and at the same time make a bold step towards financial freedom. “Did you know that; you have to save first before you can invest? This is because the money saved is what helps you buy into an investment”.
Cultivating a saving culture is always ideal, but it’s never that easy. Saving entails starving yourself off certain wants and pleasures, and that takes a lot of discipline. Many people want to save, others wish they could save, but just a few manage at the end of the day.
But count yourself lucky if you are here, because in partnership with NCBA Bank we are going to give you tips on how to grow your savings under the initiative “Stretching the shilling and Saving for Safety”
We are currently living in unprecedented times where a good number of people have been forced to stay at home in the quest to curb the spread of Covid-19, an act that has hit many sectors of the economy across the globe.
In order to survive this period, one would have to adjust their budget either downwards or upwards depending on the money streaming in at the End of the month.
So to be in a better position to stretch your Shilling here are some of the things you need to consider; Open a savings account, Shopping for discounts, cutting cost on Luxuries, separating personal and business expenditure, reviewing your spending, saving before spending and making use of short term investments.
Open a savings Account
The first step towards building a saving culture is to open a savings account. You need to have a clear picture of your income and expenses, and what takes the bulk of your money. Try to ascertain whether you’re spending more than you earn and when you have this figured out then you can move to the next step.
NCBA Bank has the Gold Savings Account that comes with lots of benefits like; competitive interest rates, unlimited credits, Free transfer to own current account via Online banking, and One free withdrawal per month. With this, you can opt to automate your savings, where a certain amount of money is deducted from your salary or business income directly and put in the savings account.
Faith Kaithia who is in charge of the Go Banking Segment at NCBA Bank advocates for the 50%, 30% and 20% rule when it comes to budgeting your income.
50 per cent goes to basic needs, 30% to wants and the remaining 20% is directed to the savings account. All you need to do is to Automate your savings Plan by setting a fixed percentage of your income for saving. Keep graduating your savings as your income grows over time.
What captured my attention more in our conversation with Faith, is NCBA Bank’s ability to accommodate everyone, including people living in the Diaspora and would like to have an automated savings account with NCBA Bank.
“We have what we call the Homeward Savings Account and we can actually help you save and automate your savings plan. All you can do is call us on this number +254 711056444 or send an email to email@example.com and we will help you start saving,” she said.
Having a budget would help guide you on what you ought to spend your money on and what you shouldn’t.
With a budget, you would know your needs and wants and have a clear picture of how to cut down on spending on your wants. Wanting to satisfy your wants would make you unable to save. A budget will help you plan better, save better and cut down unnecessary expenses.
Avoid the impulse buying urge and the need to please your friends always just because you are the only one working in your circle.
Covid-19 has brought around an interesting time that has forced many people to reconsider their expenditure habits in order to save a few coins and plan ahead.
“…with this period I had to re-think my budget and shop according to my priority list. Create a shopping list with everything you would want to buy then on another list you select what is of priority to you”
Ms Kaithia advises that doing this helps you eliminate things that are of less importance on your shopping list; giving you the opportunity to meet your needs before wants.
Track your expenditure
It is very important to account for every shilling that you earn, because your spending habits determine if you would be a successful saver or not. Keep track of your daily lifestyle and what you spend your money on. After assessing where your money goes, look for ways you can minimize how much you spend.
For example, NCBA Bank’s Ms Kaithia used to spend a lot on impulse buying, eating out and get away trips but now that Corona has paralyzed lots of activities, she is able to save the extra coin that she would have spent on normal days. Always focus on what’s important.
Knock Off Peer pressure
This calls for high levels of discipline in order to avoid being swayed by other people’s actions or trends that might disrupt your savings pattern.
“The first rule to avoid living off your budget is planning and discipline. If you plan it and add discipline, it will work for you. You must shun off that pressure of trying to buy something you have not planned for… so for you to live within your budget I will just leave you with something that says “KNOCK OFF THE PEER PRESSURE” says Faith Kaithia.
Save for Emergencies (Planning ahead)
Emergencies happen all the time; this is something we have no control over, and the best way to handle emergencies is to save, so you won’t be left out of the dark when the situation arises.
Ms Kaithia who works with NCBA bank tells us that it’s important to always set aside 3 to 6 times of your monthly living expenses as an Emergency fund. What you must keep in mind is that your emergency savings should be different from your normal savings.
“A wise person will always plan ahead. In real life we say what gets measured gets done. So you must have a plan and try and see how the plan can work for you. So when it comes to money matters you have to think of what we call a savings Goal. And you have to ensure your saving Goal is SMART. Let’s assume you want to buy a plot in 2 years’ time and it will cost you Sh1.2 million. So in this scenario you can have two options; paying in cash or pick financing from the Bank. At NCBA we do financing and we can finance you up to a certain value ratio; like 50% and you contribute the rest… Save according to your earning pattern,” posed Kaithia.
Savings Culture in Children
NCBA Bank’s Faith Kaithia advises that it’s important to introduce your kids to the money language from the age of 3 to 6 years.
“Research shows that children start to get the money gist at the age of 7, so by the time your child is turning 7 years, you ought to have let them know about the money language, money habits and at this point you can actively involve them in money related subjects. Expose them to platforms where they can learn about money like NCBA’s Financial literacy program for Children or you can teach them online”
Ms Kaithia adds that by the time kids are turning 11-13 years, they can be engaged in high money matters like; how you shop in order to understand the whole process.
“…by the time they turn 14-18 years here you start to involve them in other money matters; investment language, money making, compounding and introducing them to the investment subject… so to make its short by the time your child turns 7 years make sure they know a lot about money matters”.
Avoid Gatherings and Events
Friends are important, but when you have friends that won’t let you save, it’s best to minimize the way you see them. Gatherings and friends that prompt you to spend money won’t only kill your savings but might even push you to spend above your earnings.
The best way to save is having a target; saving without a target might not keep you motivated, but saving for a target keeps you motivated and focused. Have a realistic goal and save towards it.
Now with all the tips at the plum of your hand, we must also look at the benefits of being a formal Bank account holder, especially the NCBA Gold savings account.
The NCBA gold savings account- Product Purpose Anyone with (out) a current account in the bank can open this account and use it for savings by depositing/transferring cash either directly or via standing order. This encourages a savings culture
“For you to start saving you need the tools, and the first tool you need is a bank account and the best option for a savings plan is having a savings account where you put your emergency funds. The benefits are; Capital protection, interests earned, sense of belonging, Access to Credit, access to loans and overdrafts among other things”.