What is savings?
Putting aside part of the income earned for future use or investment in long-term assets like land or income generating assets like stocks.
Why do you save?
To cater for unforeseen future calamities, such as sickness, pay bills and to buy property or invest in income generating activities so as to generate revenue even while you are sick.
How much should one save?
Individuals can save according to their ability. However, generally speaking about 30% of the monthly income is recommended.
This saving can as well be applied to people with informal income. Without proper planning, it is not easy to save. It requires commitment, discipline and determination.
How do I save?
You are advised to save in the following order, in cash form or other assets and business:
- In livestock, i.e. cattle, goats or pigs
- In property, especially land and real estate.
- In Roscas and Ascas (Rotational savings and credit Associations) and (Accumulated savings and credit Associations)
- Micro-finance Institutions (MFIs)
- Commercial banks
- In stocks or government bonds
Why do you save in the order above?
- For security of the savings
- Convenience especially accessibility of the savings
- Liquidity availability of money as and when required
- Possibility or accessing loans
- Returns on savings
What do you understand by investment?
Putting your savings into a productive activity that yields some level of returns. You want to ensure that your money keeps growing. To do this, it must be invested properly. “adequate insurance cover should be considered for the risks of each investment.”
Where do you invest some of your savings?
In transport, for instance, one may buy Boda bodas and matatus (Taxi).
You could also invest in a small business like a retail clothes shop in the City, any town in Uganda or your village.
You could also invest in farming or in anything that brings you income. The beauty about investment is that it grows and you could soon find yourself owning fleets of vehicles or factory.
Why invest in the above?
To provide a daily income. If you don’t invest, your money risks running out or losing value due to inflation. You need to keep it increasing.
Where do you keep that income from Boda Bodas?
Temporarily, you may keep your money on Mobile phone, because it can easily be accessed.
However, for long term basis, you may also open a bank account and keep your money there so that you are able to obtain a bank statement that shows a track record of your transactions. With a bank account, banks can easily assess your financial position and give you a loan to support your businesses.
You need to survey so as to find out the bank with the cheapest account management charges and a right kind of account.