President William Ruto has reaffirmed his government’s resolve to re-engineer the country’s saving scheme to bridge the investment-savings deficit. Dr. Ruto said that the current social security infrastructure in the country, including the National Social Security Fund (NSSF) and private saving schemes, only cater to people in formal employment, leaving out a bulk of Kenyans in the informal sector.
“There is no retired Kenyan today who is living on their NSSF retirement benefits. The meagre current contribution of Sh200 a month adds up to Sh72,000 over 30 years. There is no rate of return on earth that can grow this into an adequate pension,” Dr. Ruto told Parliament. “We just have to be honest with ourselves. You cannot pretend you are saving by saving Sh200 bob and it happens across board,” he added.
President Ruto has broached a critical issue- saving- crucial in wealth creation and poverty eradication. Saving is a primary reason that Savings and Credit co-operatives exist. But saving culture in the country is impeded by many factors, such as betting, which the president noted must be reined in.
How should one cultivate a culture of savings? How much of your salary should you put towards savings?
There’s a lot of debate on how much money you need to save to live a financially comfortable retirement. There are a few rules to help you save more regularly.
Don’t delay. The sooner you start, the better. Saving is the cornerstone of virtually every other decision about the money we make. It affects everything from buying a home to saving for emergencies to retirement.
People love the surprise of seeing their balance after some time and realizing they accumulated more than they thought. Like physical fitness, financial fitness is mostly about good habits. You establish a pattern and get it into a routine.
You save 10% this month over three months; you get into a routine and scale. When the routine is established, you can set to save between 20 – 35%.
As you grow older, your financial goals keep changing, and your savings and expenses keep changing too. One of the most common financial stressors is whether someone is saving enough. Saving is the foundation of financial success. Hence the saying, it does not matter how much you earn; what matters is how much you keep.
“Wealth is the accumulated leftovers after you spend what you take in. And since you can build wealth without a high income, but have no chance of building wealth without a high savings rate, it’s clear which matters more.”- Morgan Housel.
Are you struggling to save despite your high income? You got to change. Do not save what is left after spending; spend what is left after saving.
Where Should You Save Money? Different Saccos offer various savings products where you can also earn interest. If you are not a Sacco member, join one today. On average most pay interest rates of above 10%.
“Saving rules like ‘save 20% of your income” are so misguided. Not only do they ignore fluctuations in income, but they also assume that everyone can save at the same rate, which is empirically false. When we have the ability to save more, we should save more- and when we don’t, we should save less. We shouldn’t use static, unchanging rules because our finances are rarely static and unchanging. That is why the best saving advice is: Save what you can.” – Nick Maggiulli.
