Automate Your Savings: The Underrated Way to Build Wealth

Hey there, fellow savings enthusiast! I want to share with you how this underrated way can help anyone looking to build wealth over time. Everyone deserves to understand how they can put aside part of their earnings to later invest or have it as an emergency fund. Without further ado, let’s get to it.

Why Automate Your Savings?

?? Consistency is Key: Saving manually is like trying to herd cats—it's chaotic and rarely ends well. Automating your savings ensures that money magically disappears from your checking account into your savings, leaving you with one less thing to worry about.

?? Psychological Benefits: Ever notice how money in your savings account seems to multiply on its own? That's the power of automation. By squirreling away cash before you can spend it, you'll naturally adjust your spending habits to fit your new, slightly smaller budget.

?? Harnessing Compound Interest: Picture this: you save a little bit each month, and over time, your money grows pretty fast. That's compound interest at work, my friend. It's like planting a money tree and watching it sprout cash. ????

Steps to Automate Your Savings

1. ?? Set Clear Goals: Whether it's buying land in Kitengela or taking a dream safari, having specific savings goals keeps you motivated and focused.

2. ?? Choose the Right Accounts: Opt for a money market fund for potentially better returns compared to traditional savings accounts in banks. While keeping a small amount in a savings account for immediate needs is prudent, consider exploring money market funds (MMFs) for higher returns and instant access to funds. Platforms like Mali by Safaricom offer convenient MMF options, providing flexibility and competitive returns. Other examples are Zimele, Etica, and Old Mutual MMFs offering on average 12% -14% interest.

3. ?? Determine the Amount to Save: Crunch the numbers and figure out how much you can comfortably save each month. Remember, it's about consistency, not deprivation.

4. ?? Set Up Automatic Transfers: Most Kenyan banks offer online banking with automatic transfer options. Schedule monthly transfers from your checking to your savings account, preferably right after payday.

5. ?? Monitor and Adjust: Keep an eye on your savings progress and make adjustments as needed. If your income increases or expenses decrease, consider bumping up your savings contributions. Make a habit of checking your progress weekly or monthly to keep yourself accountable.

Do not save what is left after spending, but spend what is left after saving.-Warren Buffett

Maximizing the Benefits

?? Utilize Retirement Plans: Consider contributing to a Retirement Benefits Scheme (RBS) or a National Social Security Fund (NSSF). These tax-efficient accounts offer long-term savings benefits tailored to Kenyan residents.

?? Automate Increases: As your income grows, bump up your savings contributions accordingly. Imagine saving Ksh.3,000 a month for 10 years at 10% interest—that's a hefty sum of Ksh. 614,535 waiting for you at the end! ??

?? Leverage Financial Apps: Explore local financial apps like M-Pesa to automate savings or round up your transactions. These apps make saving effortless and can help you reach your goals faster.

?? Emergency Fund First: Start by building an emergency fund to cover three to six months of living expenses. This fund acts as a financial safety net, protecting you from unexpected expenses or income loss.

Automating your savings is the ultimate life hack for building wealth without breaking a sweat. ?? Start today, and before you know it, you'll have a comfortable bank account. Imagine having the option to choose investments without thinking about debt first, as the source of funding.