When it comes to money, some of us have it in plenty while others struggle. Either way, planning on how to spend it and following your plan faithfully is kinda what sets us apart a few years later.
Read a guest post by Sarah on; how to create a saving habit
First things first, budget – planning for your money is important. For it to work, you have to be intentional and as realistic as possible while creating it.
This one friend told me he does;
and 50% for daily and basic needs.
This is a good place to start incase you don’t have a plan yet.
See more on how to create a budget here; https://bettermoneyhabits.bankofamerica.com/en/saving-budgeting/creating-a-budget
If your budget includes saving and investing (I hope it does because really, as much as tomorrow ain’t promised, it is coming), read on.
How to save and invest, a few simple ways
Sometime ago I updated my status on whatsapp asking my friends how they save and invest.
Within this article are the responses I got – Thank you for your contributions.
1. Interest Earning Bank Account
Usually banks have several types of accounts with which customers can save their money. There’s the current account which is easily accessible through your phone and ATM. Then there’s the savings account and the fixed deposit account.
Here’s how they works;
It has no limit to amount deposited.
You can withdraw from it only over the counter meaning you have to physically visit your bank for you to withdraw.
You are only allowed to withdraw not more than 4 times a year.
And while your money is in the bank, it earns you an interest higher than that of the current account. It earns a per annum interest.
Fixed Deposit Account
This is different from the savings account.
Here, there’s a limit for the amount to deposit which varies depending on the bank terms. For Cooperative Bank of Kenya, the minimum deposit is Ksh. 50,000.
When depositing, you define how long your money will be in the account and you earn a periodic interest. For instance, say you’ve decided to deposit your money for three months, the interest is calculated for those three months.
Fixed deposit account generally earns a higher interest than savings account.
When maturity time comes, say the three months are up, you can either withdraw your principal plus interest or roll it over to the next period.
Contact your bank, enquire their terms and be on your way to growing your money.
See an analysis of a few Kenyan banks;https://www.tuko.co.ke/282130-best-fixed-deposit-rates-kenya.html#282130
Depending on specific banks, the requirements include; your national ID and a copy, photo passports and to fill a form from the bank.
2. Sacco (Savings And Credit Co-Operative)
It’s an association of like minded people where members deposit their funds and can borrow loans. Most well established companies have internal saccos which are effective, find out if your has one and start saving.
Usually, there’s an amount you contribute to join (for instance Ksh.1000 for Hazina Sacco).
There’s a fixed amount you are expected to contribute each month, for instance 1000 or 5% of your salary for Hazina Sacco. These monies earn you interest and dividends. Incase you are shopping for a sacco, visit https://biznakenya.com/full-list-of-the-top-saccos-in-kenya-updated-2019/ and choose your poison.
Why most people prefer Saccos over banks; Sacco loans do not have hidden charges and interest rates do not change over the lifespan of the Loans.
This one lady told me she has been in a Chama for close to two years now. They are 12 friends and they contribute Ksh. 5,000 each monthly. Now they want to purchase land.
Chamas are mostly associated with women and gossip, but lately they are evolving and the effectiveness of your chama is dependent on your strict rules from the beginning.
Planning on joining or starting one? Dig in http://blog.chamasoft.com/category/basics/
4. Inject money to someone’s business
One guy told me what he does is; for instance pump Ksh. 20,000 to a friend’s business and expect say Ksh.3,000 each month for 10 months or Ksh. 5,000 each month for 6 months. So in the end he’ll have made 10k profit.
But, there’s the cons to it. It can be a source of bad blood when they fail to pay on time or fail to pay at all. In my opinion, to avoid this, start the deals with a contract or ask for collateral which you shall return when they pay you back.
5. Become an Entrepreneur
Business is about identifying a gap in the market and filling it. Finding out what people want and is not available. Finding how to make people’s lives easier and showing them that they need your goods or services.
If this is your go to, read this, it will be of help; 12 step guide to starting a business
What’s your culture? How do you grow your money? I’d love to know.
Let’s interact in the comment section below…