How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case. –Robert G. Allen
Saving is a very important step to building wealth, yet it is not wealth in itself. You must save to invest and never assume your saving is the investment.
It is well understood that most savings accounts will not earn you substantial returns. In fact, if you are lucky, you might just get as much as the amount that inflation has nibbled on your income. Most savings earn you less than 5%, while inflation in Kenya now stands at 5.6%. Therefore, at the end of the year, your money can buy less than what it could buy at the beginning of the year.
To become wealthy, save for a purpose. Use the money for the purpose that you set out to achieve in the first place. Always avoid the temptation to break your savings for instant gratification. Avoid using the savings that you had made for building a home to go for a road trip. You should have had road trip savings in the first place.
Keep your savings in a Bank or such a place where no unauthorized person can reach it. Limit your access to the funds by keeping it in an account that penalizes you for accessing it before you stated maturity. Handing your savings to partners to keep for you is a no go because with money, trust no one.
Have at least two savings accounts, one for your emergencies and the other for investments.
Once your investment kitty is substantial, transfer the money promptly to a well-researched investment vehicle that can grow your money at least 10% per annum. 30% is better, but be wary of the risks as the wise say, the higher the risk, the higher the return. If an investment smells like a scam, don’t touch it even with a 10-foot pole. Keep to the narrow and straight.
Saving is the first step to getting wealthy, therefore, if you don’t have a saving, start today.