Savings are monies you set aside so that you can enjoy it’s use in the future. What you save generally represents only one part of your assets (what you own), and unlike investments, it usually has minimal exposure to risk and are more readily accessible.
Saving could also be described as the act of creating, maintaining, and increasing the value of assets or income over a period of time – it helps us achieve financial goals.
Here are some practical things to consider when choosing a financial institution or a savings account.
| Cost | Convenience | Value Added | Reputation |
| Is there a minimum balance? | Is the bank located in proximity to work or home or has a reliable online banking system? | Does your money earn interest? | Is the institution an established one? |
| Is there a limit to the number of withdrawals per month? | Are there sufficient alternative channels for conducting business with the bank? | What other services are available with this account? | Are you familiar with this type of account? |
| Are there fees for withdrawing money? | Are there sufficient ATMs in the bank network? | Is there a discount merchant or rewards programme? | How is the quality of customer service? |
| Is there a fee for using the ATM? | What is the maximum daily withdrawal at the ATM? | What suite of services are offered at the ATM? | Who are the owners of the institution? |
| Is there a fee for making deposits? | Can I make deposits without visiting a branch? |
After you have selected the right institution, the next step is to decide on the most suitable type of account. Here are some options:
Regular Savings – A deposit account which provides principal security and a modest interest rate.
Contractual – Interest-bearing account in which you regularly deposit a fixed sum of money for an agreed period.
Fixed Deposit – Interest-bearing account in which a fixed sum is deposited for a specific period with the option to roll over at maturity. The interest rate is usually higher than a regular savings account.
Advantages of saving with an approved financial institution
- Your money is safe
- The institution pays you interest
- You gain access to other financial services
- You are contributing to the development of the economy
Advice for saving:
- Pay yourself first – Save 10 percent of your income
- Design and maintain a budget, the best tool for saving
- Take advantage of sales and discounts
- Do not spend on unbudgeted items
- Make a list before going shopping and do not buy anything not on the list
- Create an Emergency Fund
Build a financial cushion consisting of 3-6 months living expenses. This will enable you to take care of unforeseen expenses using cash you have saved instead of getting into debt. Whenever you have used up some of these funds, replace it so you are ready for the next emergency. Since emergencies can occur at any time it is strongly recommended that this fund be established before other forms of savings and even investing.
Note: Money in the Emergency Fund should not be used to take care of periodic expenses which are not emergencies, such as school fees and car insurance; these should be budgeted for monthly.
Goal Setting – set short, medium, and long-term goals. This will help you save towards them and ultimately achieve financial independence.
See the table below :
| GOAL | DESCRIPTION (SHORT OR LONG TERM) | AMOUNT REQUIRED | HOW MUCH TIME IS NEEDED | MONTHLY OR WEEKLY AMOUNT | DATE SAVING WILL BEGIN |
| Your first goal | |||||
| Your second goal | |||||
| Your third goal |