How to feed your family on a tight budget
Welcome to the Mombo Sacco family. Voted the best Sacco in Kenya and make the best out of your money. Learn how to save, invest and spend your money wisely.
Savings
Your credit score is a crucial indicator of your creditworthiness. It aids lenders in determining whether you will default on your debt obligations and if you are worthy to receive new credit. Your credit score is a generated from your credit history which then reflects on your credit report.
It’s quite obvious that to get a loan you need a positive credit score. This is dependent on a series of loan habits that consistently build rather than destroy your credit reputation. If you’re thinking “then I won’t get a loan at all”, that’s not a solution either; because no history means no risk assessment making it difficult for your lender to ascertain your ability to pay.
If you’re struggling to build your score or simply aim to have a great credit history, then you’re in the right place. Take a look at these six loan habits that will surely demean your score, earning you a negative credit history. Plus, learn how you can fix them.
How to save money?
There are many options to spend the money, such as equity shares, fixed deposits, stocks, savings accounts, shares, real estate, insurance, etc. Nonetheless, before you continue saving, follow the following three steps:
- Define your investment criteria or financial goals.
- Understand how much risk you are able to face on your capital invested. Remember, higher risk, higher expected returns, and vice versa.
- Consider the time period for which you would like to invest and maintain interest.
Investment requires a great deal of courage and diligence. It’s better that you can start saving your money at an early point of life, because the compounding impact will exponentially increase your investments over longer periods of time. Bear in mind the tax implications, too.
When you save money and don’t invest it, your savings will quickly be devalued by rising prices. How much was a ketchup packet worth 10 years ago, and what’s its price right now? The corpus of money that seems huge at this point of time is not going to be so big ten years later. Investment is therefore important. Here are some of the reasons that underscore the importance of investment:
- Helps you build economic power
- A retirement-focused savings portfolio will guarantee that you stay financially stable long though you stop making money.
- Through investing carefully, you will meet all your financial targets.
- At a later stage in life, you can start your own company by using the wealth created by your investment.
- You should invest in goods that give tax incentives that can save a decent deal of cash.
To sum up, once you know how to invest your money, you can do almost anything you want, plan ahead of time, and invest accordingly.
Should you save or invest?
Theoretically at least, you can only spend if you save money. Because investments are made with the intention of receiving returns, your savings must guarantee that you are covered by unplanned objectives.
Start Saving small sums of money every month and keep it in your savings account. When you feel like you have accumulated a fair amount of money, start looking at the investment options by following the three steps listed above. Remember, don’t wait too long before you start investing. You ‘re going to lose the advantage of compounding, and the value of capital is going down over time.
When to shift from savings to investment?
Remember the exercise we did when we talked about saving money? The sheet of paper on which you list your earnings and spendings will help you decide when to turn from savings to investment.
Expenses that can not be avoided and the Emergency Reservation Fund needs to be held aside before you start saving. Have you got a home loan? Will you live in a rented apartment? Ensure that you take all of your major expenses into account and then assess the amount that you need to raise in order to keep you comfortable. When the pool is reached, start spending according to your financial needs.
Conclusion
Have this in mind, saving and investing are two important tools in your hands that will help you create a financially stable and prosperous future. Please use these devices wisely. When you save, don’t cut costs dramatically just to increase your savings. Only avoid costs that are not really important, such as reducing the number of movies you watch in theaters or lowering the frequency of dining out. Enjoy the journey of saving and investing!
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