As the world economy keeps changing, people adopt new ways to save money to use in hard times. Some people are running away from the traditional saving method of putting money in jar or in a savings account to a withdraw later.
Those who are not good at the aforementioned traditional saving methods have opted to save in groups. Some common new ways to save in groups are village banking and chipeleganyu. However, it is important to consider whether the chosen method is proper.
“Some things to consider when choosing the method of keeping or saving money are growth and security of the money being saved,” said Benard Chiluzi, Financial Education Facilitator at Old Mutual Malawi Limited.
For example, with chipereganyu, the last person to get the money might encounter negative economic factors like hyper inflation, thereby getting less value for the money that was saved.
Sometimes, untrustworthy individuals end up absconding loans, or not contributing at all after they get their share in case of chipereganyu, leaving group members in trouble.
“It is time to save money through a method that will allow our money to grow such as investment accounts. This helps to cover up the inherent financial risk in some individuals,” Chiluzi said.
To ensure there is money remaining every month, a spending plan or budget is prerequisite. However, some people think it is difficult to save money because they earn less such that they do not have enough for basic needs like clothing.
There is a big problem if income is less than expenditure. It is time to cut down on luxurious life style, find new money making sources and strictly follow the budget.
“People do talk about budgets, but when you take a closer look at their personal behaviour in reality, you will notice that they don’t practice what they are preaching,” said Chiluzi.