How to Save Fast and Automatically With a High-interest Savings Account?

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Let us admit: not all of us are savings gurus. We visualize the goal, figure out the amount of money needed, and make a resolution to set aside some cash for it every month… But then, our determination gradually dies down, we lose consistency and soon find ourselves far behind our saving goal. You know the story.

Does it mean you are doomed to yield your goals to your inconsistency every time? No! All you need is to get your savings automated. Opening a savings account will keep you on track until you reach your goal. But the good news is that you can get there even faster if you choose a high-interest savings account. Follow us to find out how you benefit from automating your saving habit and a higher interest rate.

Why is automating savings so important?

Making savings for a long-awaited event, emergencies or, say, a retirement is a wise strategy. It helps us to always be ahead of the game. But when we are looking to cover the distance from point A (zero money) to point B, it’s crucial to decide what speed we are going to move at. A high and steady speed wins the race.

Your saving challenge is like a race. Are you moving at a steady speed or make deposits randomly, when you “feel like making a deposit”? A volatile mood is not the only hindrance on our way. Our everyday needs can eat up most of our earnings. So if you don’t secure a certain amount of money right after the payday, you have near-zero chances to cut through those needs and make a decent deposit later.

If you belong to those who easily fall into the trap of inconsistency, automating savings is your best saving plan.
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Benefits of automated savings

  • Official means mandatory. When you automate your monthly deposits, you “officially” refer them to your monthly expenses. This commitment greatly reduces your temptation to skip the payment.

Still unconvinced? How about

  • Peace of mind. Once you step into a monthly contribution program, you no longer ask yourself questions like “How much do I have to deposit this month?” or “When do I reach my final goal?” Because you know the answers.
  • Lots of time saved. Once automated, “making a deposit” can be struck off your to-do list. You can focus on other tasks.
  • More money saved. Making a deposit from your paycheck, not your leftovers, guarantees that more money hits your savings account every month.
  • Reaching goals faster. When you decide to automate your savings through a savings account in Kenya, you can always go for the one with a higher interest rate. This means your money is not just being accumulated but also growing.

While developing your best saving plan, it’s important to define the pace that will be comfortable for you and your family. It’s up to you to decide how aggressive you want to be on your way to your savings goal.

There are several ways how your savings can be automated

  • You can stay with your current bank and set up a deposit or a savings account there. Be aware of the bank fees (maintenance fees and minimum balance fees) and ensure the interest rate isn’t too low.
  • Leverage your employer’s deposit (if any): this way, a pre-defined fraction of your salary goes directly to your deposit.
  • Open a savings account at one of your local savings and credit cooperatives (SACCOs). The benefits here include higher-interest rates and a superior fee-free service.

How to open a savings account with a high-interest rate?

The rule of a thumb says that you find higher-interest rates online. So if you are looking for a real speed-up for your savings plan, consider opening an online-only account. MOMBO SACCO offers the most competitive interest rate of 6% on your monthly deposits of minimum KES 3,000. No maintenance fee is applied, so you can be sure no shilling is lost from your savings. Enrollment is simple using the MOMBO App or through the website.

Automating your finances, start with modest feasible monthly deposits. Later on, you can increase your monthly commitment once you are doing well. Usually, 10% of your paycheck is a comfortable and efficient pace of saving.

Savings and Credit Cooperatives vs Banks: Where Is Your Money Better Off?

savings and credit cooperatives vs banks

Want to save up money or get a loan in Kenya? Basically, your only options are banks and Savings and Credit Cooperatives (aka SACCOs). The latter is a sort of a credit union. They both offer features such as saving and loans, but the experience is very different.

Banks have been there for ages. Savings and credit cooperatives are relatively new on the market of finance. But old doesn’t always mean good. We’ll tell you the basic differences between banks and SACCOS in Kenya to help you find the best place for your money.

The main difference lies in ownership

Surprised? Banks and Saccos have different forms of ownership. Believe, it’s a big deal because it greatly defines how your money feels there. People who stand behind banks are the investor(s). They put their money in the venture and logically expect very high returns. They make a profit at your expense. This explains draconian interest rates on bank loans.

A SACCO exists “not for profit”, but for the support and satisfaction of people who hold its shares. Registered SACCOs in Kenya give their members access to better deals in form of a higher interest rate on savings and lower – on loans.

Banks

The greatest thing about banks is that their loans are always available. Although you might need collateral to borrow larger amounts. Other pleasant features are a dense net of ATMs and mobile banking with a transfer feature.

Things to keep in mind when dealing with a bank

  • Notorious high-interest rates that can go higher during the loan’s lifespan.
  • Interest rates on savings are very low.
  • Except for interest rates, banks make money on various fees they withdraw from your account. Be ready to pay insurance fees, minimal amount fees, accrued interest fees, processing fees, account maintenance fees and so on. With some banks, you even have to pay for paying your loan off early. They call this ridiculous fee “early repayment charge”.
  • Finding a no-fee savings account can be hard. You can look for one at online-only banks.

Due to the rate capping, banks rates in Kenya now are at a maximum of 15%. Banks give out loans very reluctantly as they find unsecured lending very risky. This option is saved for mobile banking loans, which aren’t interest capped. Such situation forces many individuals and SMEs to run for other expensive money lenders.

If you still decide to get backed up with a bank, ensure you choose a reliable institution. Beware of banks that heavily rely on customer’s deposits.

SACCOS

Savings and credit cooperative societies exist to serve their members, not to build up profit. In Kenya, SACCOs emerged a few decades ago to fill the gap of financial services in small towns. Now they are threatening major commercial banks with their higher member satisfaction rate.

Advantages of SACCOs over banks

  • Your savings attract a high-interest rate. At MOMBO SACCO, your annual percentage yield is 6%. It means that you get 6% of your savings as interest every year. You can either withdraw them twice a year or leave them on your savings account.
  • Members can get loans at a steady interest rate as low as 12%. You can have a peace of mind that the rate won’t grow with the lapse of time. For comparison, local banks almost never offer loans at a total cost of credit lower than 20%. Usually, their offer is double the SACCO’s rate.
  • At MOMBO SACCO, you can get a loan that is 5 times bigger than your savings.
  • Your high interest rate on savings compensates the interest rate you pay on a loan. To make this happen at a bank, you need to hold a very big amount of its shares.
  • While repaying a loan, you keep building up your savings account. With the draconian rates of banks, it is psychologically impossible.
  • You can borrow money even after you give up employment. A bank would require collateral (assets) in such case.
  • As a member, you can control your Sacco by attending meetings and electing officials accountable to you.
  • Unlike banks, SACCOs in Kenya trade their shares at affordable prices. For example, the MOMBO’s share costs only KES 100. Your risk is minimal because your liability as a member is equal to the amount of your shares.
  • Unlike other SACCOS, MOMBO SACCO uniquely offers 2 streams of revenue. Except for 6% interest on savings, a member gets dividends on shares as well.

To find the best place for your money, ensure you do your research and compare terms at both registered SACCOs in Kenya and banks. Open a savings account with the society that values your input. The money you earned with a dedicated work is worth a dedicated treatment.

Here’s How To Handle Getting Fired

how to handle getting fired

Over the last couple of years, the people who have been turned away from their jobs as the Kenyan economy suffers has risen exponentially.

From banks, to hospitals, to media companies and manufacturers, job losses have become the norm as companies resort to the only way to remain profitable, cutting costs and moving digital.

This has proven such a big disruption on the otherwise comfortable lives of the blue collar workers who are used to a salary each month.

Dismissal throws workers into the deep end and they struggle to cope with family and status since currently most household are being supported by a sole breadwinner. It can usually mean breaking up of family , frustration and finally depression and alcoholism or even suicides.

It is no wonder that companies are now offering to give free counselling to the workers it has laid off in a bid to help them absorb the shock.

However, you can survive this trauma with the right mind and as they say, victory loves preparation.

According to the Retirement Benefits Authority, only one in seven people are ready for retirement meaning that probably you and your circle of friends are living precariously.

In fact, true to the Njaanuary tales, Kenyans usually burn through their incomes before the end to each month. The Kenya Deposit Insurance Corporation, found out that only 3.2 per cent of Kenyans have more than Sh100,000 in their accounts.

“As at November 2017, the KDIC coverage level was at Sh268.1 Billion with 46.6 million accounts fully covered. This translates to 96.8 per cent of total number of accounts covered,” CS treasury Henry Rotich said in the recent budget proposals.

So when the news comes that you no longer have access to the glass skyscraper that has been your second home for years, with no savings you will need to think fast.

Don’t Burn Bridges

A flurry of emotions may be the first thing that flows into your head as the decision comes with surprise after much suspense and rumours as to who will face the axe. It’s not uncommon to feel anger toward the company and certain employees.

Try not to talk when angry and never bad-mouth a former employee or employer especially online which never forgets. That small sense of satisfaction from dissing a former company will ultimately be outweighed if it costs you a future job.

It may also help to maintain bonds with your former colleagues who could easily be your referees and may even help drop some openings. The employees who are nowadays clustered in WhatsApp groups will come in handy in giving support, financial advise and giving you hope although it can sometimes sound awkward.

After being fired, aim for next, not best as you try to figure out which direction to go to. A lot of the people get stuck trying to go off on some vision quest when they lose their job. Forget that. Get your next job.

Being stuck up to a career that pays as good as your last one or trying to stay in the same career can be associated with ego, you need to strip that and assume this is your first day out of college going into internship. Anything will do.

However while you are between jobs, you have time to clear your mind and plan your rebound. While you may feel that your future is uncertain, it’s important to realize that getting fired is not the end of your career.

Your lifestyle will also have to change, you must adjust it to your new realities or the bills will come up fast and drown you.

You can start mentally preparing for such a situation as Stoics suggested we take time off to practice worst-case scenarios. We should, for example, mark out a week, a year where we eat only stale bread and sleep on the kitchen floor with only one blanket, so we stop being so squeamish about being sacked or imprisoned.

But most importantly save up at least a month extra salary so that you can always have some sort of flexibility. Ideally you should save up three months of your salary at any given point, take up employment insurance and if this sums up with your exit package, then you can last over a year on an adjusted budget while you get back on your feet.

The most important thing to remember is that everyone is dispensable. Never get too comfortable on your job and always have a contingency plan.

Plus invest in your early years of employment so that you may have a fall back business which you can take full throttle or at least an idea of how to run a business, lest you risk burning all your savings and exit package on quick fix quail businesses.

Saving 101: A Little Saving Goes a Long Way

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Haba na haba hujaza kibaba is a Swahili saying which loosely translates to little by little fills the measure. With Nairobi being ranked as the fourth most expensive city in Africa, Kenyans are always on the lookout for bargains and ways to stretch the shilling. Below are some tips to keep your spending in check and ensure you are saving up your coins.

 

1.Banking tips

A report by Financial Sector Deepening (FSD) in 2017 estimated the lowest cost to owning a bank account in Kenya to be around Kshs 6,436 per year . This is the average cost for withdrawals, transfers and account maintenance fees. How do you make sure that these costs do not go higher?

  • Plan withdrawals– Banks charge different withdrawal fees while some accounts come with a fixed number of free withdrawals per month. Make sure to find out also from your bank the charges of withdrawing from your bank’s ATM vs. another banks ATM. The difference could be much as from Kshs 30 to Kshs 200.
  • Separate your paycheck– (savings vs. current accounts). You can withdraw from a current account anytime whereas a savings account accrues interest and has limited withdrawals. You can approach your Human Resources Officer to divide your paycheck into these two accounts or have a standing order with your bank where at a specific time of the month, money is transferred from your current to savings account.
  • Low interest loans– The growth of the fintech industry in Kenya has led to the growth of many array of loans one can have access to. There are traditional banking institutions, Sacco’s, mobile money loans apps such as Branch, Tala and Mombo. A quick Google search will present you with tons of quick and unsecured loan options. Be sure to check the reviews of such apps/sites as well as their interest rates as the devil lies in the details.

 

2. Shopping tips

  • Wholesale shopping– Opting for this option saves you money per unit price of items.
  • Deals/discount sites– Be on the lookout for holiday sales such as Black Friday which has caught on especially with e-commerce players such as Jumia. There are also many sales in clothing and electronic stores during the Easter and Christmas period. Buying advance tickets to events on sites such as TicketSasa will always cost you less in comparison to buying them at the gate. Restaurants also run BOGOF( buy one get one free) offers on different days of the week such as Pizza Inn on Fridays.
  • Reward cards/Coupons– Be sure to take advantage of the loyalty cards offered by the various stores especially supermarkets where you accumulate points after every purchase. You are then able to redeem such points in store which goes a long way in achieving your saving goals. Most online retailers also provide coupon codes on their social media or on newsletter for their subscribers.
  • Do It Yourself (DIY)- You can save a lot of money but requires a lot of time input. The internet has infinite ideas on DIY that can be easily executed after a visit to your local hardware store for materials or also using easily available materials in your homes.

 

3. Expense tracking and budgeting tips

It is paramount to know your spending habits in order to have a clear picture on where you can cut your spending. There are many apps available that can help one track budgeted expenses vs. actual spending plus investments if any.  You can also create a personal expense tracking spreadsheet that can contain spending categories with set limits which gives you visual output whenever you go over budget. Most paid apps export also export their reports to Excel.

 

4. Alternative income tips

Are you pushed to the wall and have barely zero savings despite the above tips? You should consider diversifying your income streams. Have you invested in any stocks or bonds?  Do you know any no fee investment funds in Kenya such as one offered by  Mombo App?  Do you have any skills that you could use to do freelance projects? The earnings from such gigs could go into your high interest savings account which will slowly but surely increase the money at your disposal.

 

 

 

 

Bank Fees Eat Up Your Savings? Open a No-Fee Savings Account!

no-fee savings account

Deep in our heads, we understand that savings account must be about saving… But what are those annoying discharges that drain our savings accounts on a monthly basis? They are maintenance fees… You must have felt their thievish manners while trying to set some cash aside for an important event or a long-desired vacation.

But you know what? You don’t actually have to pay for the privilege to save. An online no-fee savings account can cope with your savings goals no worse than a premium bank account. And even yield MORE money due to higher interest rates. We’ll tell how to make your money work harder for you with an absolutely free online savings account in Kenya.

Why is online savings account better?

Both brick-and-mortar and online banking institutions offer fee-free savings accounts. However, online-only savings accounts usually have much higher rates. So if you want a high APY (annual percentage yield) and don’t want maintenance fees, online accounts are your best bet.

You may consider looking for a fee-free high-interest savings account at your local SACCOs. They are not-for-profit financial institutions that offer prominent service and highest interest rates for their members.

Online savings accounts have another exciting advantage. You can manage and control them online using a mobile app. The MOMBO App enables you to enrol and start saving in a few finger taps.

But the list of benefits doesn’t stop here. With MOMBO SACCO savings account, you get access to a loan equal to a 5-fold amount of your savings. This makes this account an all-purpose wallet to support any of your life events. Expected and unexpected.

Benefits of a no-fee savings account by MOMBO SACCO

  • Firstly, no maintenance fees. You can have a peace of mind. You won’t ever experience any unpleasant discharges from your savings account.
  • Convenient access to your savings data from your smartphone, laptop or tablet via MOMBO App.
  • It pays you 6% interest. You can withdraw your accrued yield twice a year, in January and July.
  • The borrowing feature becomes available after 3 months of membership. You can borrow as much as 5 times your savings at the 12% rate.
  • For a loan, you don’t need a collateral (property or money used as a guarantee) for approval. Members guarantee each other with their savings.
  • For a member, qualifying for a loan is a simple and quick procedure. It takes as long as 10 minutes for short-term (6 months) emergency loans. Long-term (4 years) loans get approved in one week.

How to open a savings account at MOMBO Sacco?

  • This cooperative is only for Kenyan salaried employees, entrepreneurs, civil servants or farmers. You can enrol in MOMBO Sacco by making a request through the MOMBO App.
  • To become a member, you’ll need to pass several checks to prove you are credit worthy. Usually, it takes from a couple of hours to 3 working days to get your membership approved. Membership includes buying shares for the amount of KES 10,000.
  • After approval, you can start making deposits (minimum KES 3,000 a month) to your savings account.

Consistent monthly payments are a great way to automate your saving process and also ensure you save more than just leftovers.

Before you open an account, decide which features are crucial to you. A high-interest, loans, no fees, or a mobile app for an easy access to your account? Make sure you choose the best online savings account with the maximum set of benefits and without hidden fees. To open the fee-free savings account, please, download the MOMBO App or enrol right on this website.