Habits form over time, and consistency is the unsung hero of wealth accumulation. But let’s face it; being consistent with saving can be incredibly challenging when you are managing your own money. The temptation to spend is always there. That’s why a SACCO’s automatic savings system is so effective – it removes the need for constant willpower and allows you to build wealth quietly.
Think about this: even a small, regular amount saved in your SACCO can grow surprisingly fast, especially when you factor in the benefits:
- Automatic Savings: You decide on an amount, and it automatically gets deducted. No more relying on your feelings or memory.
- Compounding Effect: SACCO savings, plus dividends on those savings, grow at an accelerated pace over time. This phenomenon is known as compounding and is powerful in growing wealth.
- Access to Affordable Loans: As a member, you qualify for loans at favorable rates, which can be reinvested in assets or other wealth-generating opportunities.
- Avoiding the “Money Jar” Trap: Those savings you have at home are easily accessible and tempting to use for random costs. Sacoo is your disciplined partner.
- Financial Education: SACCOs often offer training and workshops to help members make more informed financial decisions.
Let’s look at the potential growth, assuming an annual interest rate of 15% at your SACCO for both savings and loans. Note: Actual SACCO rates may vary.
(Table Illustration – Kenyan Shillings)
| Year | Starting Savings | Monthly Savings (Ksh) | Annual Savings (Ksh) | End-of-Year Savings (Ksh)* | Loan Amount (Ksh) | Accumulated Share Capital |
| 1 | 0 | 2,000 | 24,000 | 27,600 | 27,600 | 27,600 |
| 2 | 27,600 | 2,000 | 24,000 | 59,840 | 59,840 | 59,840 |
| 3 | 59,840 | 2,000 | 24,000 | 98,816 | 98,816 | 98,816 |
| 5 | 159,680 | 2,000 | 24,000 | 277,154 | 277,154 | 277,154 |
| 10 | 500,000 | 2,000 | 24,000 | 1,270,498 | 1,270,498 | 1,270,498 |
This is a simplified illustration and does not include fees or other expenses. It assumes reinvestment of dividends for subsequent loans and increased savings opportunities.
As you can see, even with a small consistent savings of Ksh 2,000 a month, the growth potential is significant. Don’t underestimate the power of consistent action. Join a SACCO, and let your savings grow steadily over time.
