By Amos Mzenge

AUG 1 – Saving is sometimes treated as an afterthought. When a budget is drawn up, one lays out their fixed expenses, variable expenses, debt repayment and other miscellaneous expenses, whatever is left over is then saved. Arguably so, one has still saved.

To successfully set yourself up for retirement, it is important to treat saving with just as much significance as one does the other expenses they may have.  These accumulated savings will guarantee one a smooth transition to the life after retirement and ensure that one can live a lifestyle akin to the one they were living before retirement.

Starting small is better than not starting at all. Devise a plan and stick to it. That could be living either within or below their means. It could also be allocating a bigger percentage to your savings than to your miscellaneous expenses.  Most importantly, your plan should be realistic and suited to your lifestyle.

It is also important to consider diversifying your savings portfolio. Spreading out one’s savings reduces the risk of losing your savings and increases the chances of ultimately earning higher returns. By spreading various amounts of your savings across various saving avenues you end with a weighted average of return on your investments.

Automating your savings could also help you grow your kitty. Setting up an automatic, regular payment from your bank to a savings account will make it easy to ensure that saving is not laborious. It will also ensure that one is saving a fixed amount of money every month leading to a steady increase in your savings.

Additionally, reining in on your spending is highly beneficial if you want to grow your savings kitty. Keenly examine whether it is possible to reduce the amount of money you spend on entertainment, rent or fuel. This can help minimise exorbitant expenses and thus directing the surplus money to your reserves.

Furthermore, direct any extra money to the savings kitty. These extra funds can be in the form of receiving a raise in salary, receiving money from your chama, getting your quarterly bonus or even a month within which you have significantly underspent your money. Rather than treating this as an opportunity to splurge, direct this money to your savings as a gift to yourself.

Moreover, one should increase the amount they are directing towards the kitty. It will be difficult to reach Kes 10million goal by saving the same amount over time. Increasing this amount can accelerate one’s chances of reaching this goal faster. The increase does not have to be exponential. Increasing it by adding as little as 1000 shillings can make a difference

Whilst much has been said on how to successfully grow your savings, it is important to also know what not to do. Firstly, avoid withdrawing any money from your account. It might be tempting to especially if one’s savings look hefty, but avoid doing so. Even in cases of an emergency.  It is advisable to set up a separate emergency fund. This offers greater flexibility and peace of mind allowing you to handle emergencies without disrupting your saving goals. Also, do not ignore extenuating circumstances such as inflation. It is also important to take note of the interest rates of various financial institutions before choosing where to open your savings account.

Amos is the Manager, Enwealth Capital Limited

Email: amzenge@enwealth.co.ke