Save or borrow?

If you want to buy something which you can’t afford from your everyday money, you will either have to save up for it or borrow. Deciding on the best option will depend on your circumstances.

Where possible, it's usually better to save than borrow. There are several reasons for this:

The cost of borrowing. You usually have to pay interest when you borrow money, be it a loan, overdraft, hire purchase or credit card. Exceptions to this include interest-free loans from family and friends, interest-free credit from stores (in which case check the small print to make sure it really is) or if you pay off your credit card bill in full each month within the interest-free period.

If you save money in a savings account, it will earn interest. So if you save ksh 5,000 you will also have interest on top of this. The amount of interest depends on the AER interest rate paid and how much you have in the account each time interest payments are calculated.

If you save rather than borrow, you don't have to worry about how you will repay the loan.

If you buy something with your own money rather than on credit, you will own it outright straightaway.

In Kenya it’s either you save your money in a SACCO, a Bank or purchase real property with your surplus cash.

Two decades ago, there were few banks in the country, those which existed only operated from major towns only.

This led to emergency of SACCOs in small towns to cater for the services of farmers and few individuals who wanted to save their little cash.

Over time, it has become increasingly important to have both SACCOs and Banks because people never trust their neighbors with money anymore. One worrying trend emerging from the Kenyan population,

Vacations are supposed to be relaxing, but it’s hard to unwind when you’re constantly stressing about how you’re going to pay for it all. With a little creativity, you can bulk up your account and be ready to hit the road or beach in style, without going into debt to do it.

Here are 6 strategies to save for your next vacation.

  •  Open a Dedicated Vacation Account One easy way to save for a special trip is to open a dedicated Holiday savings account.-You can set up automatic payments into the account, and with a little restraint, leave that money there until it’s time for your trip. If you choose an interest-bearing account, your money might even grow while you’re looking forward to your trip e.g Kimisitu Sacco has a holiday saving account  that offers competitive rates of interest and has no ledger fees.

A kids savings account is a great way to teach your children about money and saving right from the start, but in order for you both to save efficiently, they need to have their own account a good example is little angles account for Kimisitu Sacco . With kids saving accounts offered by most banks/Saccos, they're easy to sign up for and take your children through the process of saving money. Here are five reasons your kids should have a separate savings account:

1. Gives Them Freedom When your children have their own savings account, they feel like it's their responsibility. This helps them feel freedom from the uncertainty of sharing an account with you. When children are learning to save, they want to know they have the freedom to do what they want with their account without you hovering over them.

When you borrow money, you might end up with more cash than you actually need. This is especially common with student loans and auto loans (whether it happens intentionally or by accident). When that happens, what can you do with the money – are you allowed to spend it on anything you want?

To find out what's allowed, check your loan agreement. In some cases, there are restrictions, but other loans allow you to do whatever you want with the money.

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