#SolutionSaturday

Get Serious About Saving! 🧵

If you ever doubted the importance of saving, the #Covid19 pandemic made it clear just how necessary a financial cushion can be. Many people had trouble paying their bills since the pandemic began & couldn't build emergency...

>>2
...savings by mid this year. That’s why we should get serious about saving - even if you think you are already in a comfortable financial position.

@TheAbojani often encourages people to follow a 50-30-20 rule when dividing up their take-home pay, with 50% of your income...

>>3
...going towards living expenses like rent and groceries, 30% for recreation or entertainment, and 20% going into savings.

But for people who are just starting to save, jumping from zero to 20 can be a daunting task & sometimes an impossible fete.

>>4
That’s why it helps to set incremental goals, according to Robert Ochieng, CEO @TheAbojani

Saving money affords you new opportunities in the future.

It's never too late to put some money aside in a high-yield money market fund account or treasury bond.

>>5
He recommends starting with a number you can actually commit to, even if it’s just a few shillings & gradually adding more as you get comfortable.

You may start by saving 10% of your monthly income in October & then increase that amount by one percentage point each month.

>>6
By September 2022, you will have tripled the money going towards an emergency fund account each month.

“Saving is a long term game, and it’s a situation where the tortoise wins every time,” says Robert.

Plan for @TheAbojani October Personal Finance & Investments Masterclass 📚

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More from @cheruiyotkb

3 Sep
Most investors do not factor in the cost of investing – commission fees, management fees, taxes etc.

A return of say, 8% on a money market fund or bank fixed deposit accounts easily reduces to 7% when you throw in the costs.

>>2
A major cost that's incurred but hardly acknowledged is depositing via Lipa na MPESA to company paybill numbers. Frequent transactions lower the returns significantly. The cost of depositing, say 5K is 85/- on average.

>>3
If done monthly, you'd be losing money or growing it at a much slower pace since you only earn 32/- in a month on every 5K deposit.

The compounded return, month to month, hides this "backward motion" progress.

>>4
Read 4 tweets
16 Aug
Financial success isn't a measure of income.

It is a measure of NET WORTH.

NET WORTH is a measure of the TIME it would take you to maintain your lifestyle without working.

Formula:

Assets (What you OWN)
LESS
Liabilities (What you OWE)
For many working Kenyans, net worth is largely hidden in immovable fixed assets like land & buildings.

The queer Kenyan habit of accumulating pieces of land here & there has made many have little cash or cash equivalents thus being called "asset rich but cash poor ."
The disadvantage of being "asset rich but cash poor" is when an emergency situation arises.

You've heard people detained in hospitals due to huge bills. This forces many to conduct fundraisers. Likewise, huge car repair costs forces many to surrender titles for short term loans.
Read 6 tweets
15 Aug
You can change habits! 🧵

We often talk about the need to build up an emergency fund that is 3-6 months worth of your monthly expenses. However, the thing that we neglect to discuss is that this can literally be the hardest part of your financial journey!

>>2
If your natural habits do not lend themselves to saving, it is hard. Especially if you have debt, don’t have a high salary, are living in an apartment that is outside of your budget or can't resist the urge to go out balling with friends despite a weak resource base.

>>3
So what do you do?

First step: You absolutely have to create a budget.

This does not mean you need to religiously track every shilling forever, but you have to understand where your money is going so you can stop the cash flow in places that are not serving you.

>>4
Read 5 tweets

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