Stop making these 5 saving mistakes

Saving can be a daunting task. This is especially true when you are new to the financial literacy world. Here are a few mistakes you might be making in your savings journey.

  1. Saving for the sake of saving.

That is, you do not have a specific item/ goal you are saving towards.

As a beginner, before you start saving up for those big goals like saving to buy a car or piece of land, there are some accounts you should have. These are:

  1. An emergency account- with 3 to 6 months’ worth of your living expenses.
  2. Sinking fund account- for irregular planned expenses like birthdays, vacations, taxes, car insurance, etc.
  3. Opportunity fund account – for courses and other expenses that will improve your life.
  4. Investment account – For saving up to make those big investments that might not always be available.

  1. Lack of a specific amount and due date.

For example, if you are saving up for your emergency fund, the specific amount would be 6 months’ worth of your monthly living expenses. A due date might be at the end of the year, 31/12/2022.

  1. Having an unrealistic saving goal.

goal lettering text on blackboard

Let’s say that you save sh.5000 every month. However, you have to borrow money to make it to the end of the month. That is you have to borrow to cover your needs before the month ends, then the sh.5000 is an unrealistic goal. This situation can be handled in two ways. One, either reduce the amount you are putting aside or increase the amount you are earning.

During this time track, your expenditure for at least two months then uses this to set up your monthly budget.

Savings tips for beginners

  1. Lack of a safe and inaccessible place to save money.

There is no need of saving up in your M-shwari only for you to withdraw your money before the maturity date. Instead, you can save your money in a place like an MMF (money market fund) account where accessing the money will be harder.

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  1. Lack of an accountability partner.

Have you ever wondered why chamas and merry-go-rounds are so successful? Well apart from the fact that members of these groups save towards a common goal. They keep one another accountable.

So get yourself an accountability partner the next time you are saving.

There you go mistakes you might be making. How many are you guilty of?