Investment

The Road to Achieving Financial Freedom and Why NSSF is Your Partner

BY Soko Directory Team · March 29, 2022 11:03 am

KEY POINTS

Financial freedom means growing savings that secure your future, enough to allow you to retire peacefully or pursue a career you want without being driven by earning a salary every month. Financial freedom means your money is working for you, rather than you working for money.

KEY TAKEAWAYS

Today, even you are better positioned to either adopt and sustain behavioral changes needed to secure your financial future or use that cash to finance things that quickly lose value. Luckily, NSSF Kenya can help you begin your journey towards financial freedom.

Achieving financial freedom is the ultimate objective for most individuals. Being financially free means having enough savings, financial investments, and cash at hand to sustain the kind of lifestyle you desire.

It means growing savings that secure your future, enough to allow you to retire peacefully or pursue a career you want without being driven by earning a salary every month. Financial freedom means your money is working for you, rather than you working for money.

How Do You Become Financially Free?

Being financially free begins by building a safety net of savings funds and creating enough passive income by investing. Of course, this has its fair share of challenges. We are perpetually burdened with increasing debt, monetary emergencies, excessive consumer spending, to name a few that we end up failing to reach the financial objectives that matter the most.

Such challenges confront everybody, but one of the surest ways to attain financial freedom is through social capital. It all starts with making more intelligent choices.

For example, suppose you are 22 years old and consider the power of compounding and internalizing the long-term benefits of saving today for a much brighter future. In that case, you will reconsider your impulse purchases.

That could mean foregoing eating chips and chicken at the cost of Kshs.1000 once they realize that the permanent loss of that Kshs.1000 a month could reduce their net worth at age 62 by Kshs. 2,563,314.84 when compounded at 7% annually. This is assuming no withdrawals are made within the entire period.

Of course, when you talk to young adults about these topics, they will generally conclude that they are okay without the chips and chicken and would prefer the Kshs.2,563,314.84. Discussions with older consumers will be met with, “Why didn’t anyone tell me this earlier?”

While the shocking experiences can be overwhelming in an instant, they generally work in helping people maintain a disciplined approach to living and saving.

Why Does This Matter Now?

The past few years have led to significant changes in consumer habits. The Covid-19 pandemic, in particular, was a wake-up call to people who did not have any form of savings. The tough economic times they faced changed their mindset and made them more open to saving for emergencies.

ALSO READ: Mistakes People Do When Trying To Save Money

Today, even you are better positioned to either adopt and sustain behavioral changes needed to secure your financial future or use that cash to finance things that quickly lose value.

Arguably, parents, friends, and employers are obligated to “share the light” of knowledge and give the young ones this wisdom the gift of a better and brighter life.

This is a challenge to the young generation – utilize the many future value calculators available online and check what it means to sacrifice just Kshs.1000 a month (cost of a pizza) and save it for the future. Ask yourself how much you will feel with over 2 million at retirement. Intriguing, right?

You can easily hit that amount or higher if you invest in social protection with National Social Security Fund (NSSF).

What is NSSF?

NSSF is a Kenyan organization offering social protection to all Kenyan workers in the formal and informal sectors. It is mandated to register members, receive their contributions, manage funds of the scheme, process, and ultimately pay out benefits to eligible members or dependents.

If you are employed in the formal sector, you can register to be a member of NSSF and have your employer deduct your monthly contributions from your salary and remit them for you. On top of your monthly contributions, there is also an option to top it up by any amount you wish if you are employed. You can download the top-up form from the download section on the NSSF website.

NSSF is available to Kenyans above 18 years of age, and it allows you to build a social savings net by making monthly contributions for your retirement. The minimum amount one can save with NSSF is Kshs.200. However, contributing more is highly recommended to enjoy the benefits of more funds when you retire.

You can also choose to be a voluntary member where you will pay a minimum of Kshs.200 to activate your membership and contribute the same amount, or more, every month as you build your social savings net.

As a voluntary member, you can contribute through M-PESA or by visiting the nearest NSSF branch. (The initial contribution will reflect on the member’s statement)

What Benefits Does NSSF Offer?

Investing with NSSF has lots of benefits, which includes:

Age/Retirement Benefit – Members are eligible for this benefit when they reach the age of 60 This is the official retirement age.
Withdrawal Benefit – Members are eligible for this benefit if they are at least 50 years of age and have retired from regular paid employment.
Survivors Benefit – Paid to dependants and relatives of a deceased member.
Invalidity Benefit – This benefit is paid to certified members who are permanently incapable of working because of physical or mental disability or members who are at least 50 years of age and suffer from a partial incapacity of a permanent nature that prevents them from undertaking employment.
Emigration Benefit – This benefit is paid to members emigrating from Kenya to a country that is not a member of the East African Community without the intention of returning to reside in Kenya.

Why Save With NSSF?

Your money is safe. NSSF invests the members’ savings in secure, high-yielding investments such as government securities, real estate, and shared equities. This means that your money is always working and available when you need it.

One of the biggest reasons to save with NSSF is because it is the road to attaining your financial freedom. Of course, the next level of financial freedom is keeping your emergency fund intact while saving for other goals, like retirement, a home, vacations, or your child’s college costs.

Nevertheless, retirement should come first since you can’t borrow for it. Saving up through NSSF generally means having more money at your disposal when you stop working.

You’ll know you’re on the right track when you can allot portions of your paycheck—even if they’re small—to several needs simultaneously, including regular bills, debt payoff, and short- and long-term savings.

How to Get Started With NSSF

You can register with NSSF using the USSD *303# or by visiting the nearest NSSF office. Click Here for more information on member registration.

If you are an employer interested in registering yourself/your company with NSSF, please Click Here for more information on employer registration.

About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory