Don’t Wait, Start Saving Now: How NSSF Offers You The Best Benefits And Incentives
Saving for the future is a crucial aspect of financial planning. However, many people may not know when is the best time to start saving or how to save effectively.
I would like to explore the benefits of starting to save early, the challenges of saving in Kenya, and the opportunities offered by the National Social Security Fund (NSSF).
Why start saving early?
The best time to start saving is as early as when you access any form of income and as young as teen-age. This is because saving early has several advantages, such as:
Compounding interest: Saving early allows you to earn interest on your savings, which in turn generates more interest over time. This means that your savings will grow faster and larger than if you start saving later.
For example, if you save $100 every month at a 10% annual interest rate, starting at age 20, you will have $1,083,470 by age 65. However, if you start saving at age 40, you will only have $149,036 by age 65.
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Financial security: Saving early helps you to build a financial cushion that can protect you from unexpected expenses, such as medical bills, car repairs, or job loss. Having a savings account can also reduce your stress and anxiety about money and improve your mental health.
Financial goals: Saving early enables you to achieve your financial goals, such as buying a house, starting a business, or retiring comfortably. By saving regularly and consistently, you can accumulate enough funds to pursue your dreams and aspirations.
Read Also: Here’s Why You Should Have A Retirement Saving Plan For Your Domestic Managers
What are the challenges of saving in Kenya?
Despite the benefits of saving early, many Kenyans face difficulties in saving for their future. Some of the challenges include:
Low income: According to the World Bank, the average income per capita in Kenya was $1,816 in 2020, which is below the global average of $11,297. This means that many Kenyans have limited disposable income to save after meeting their basic needs, such as food, housing, and education.
High inflation: The inflation rate in Kenya was 5.8% in March 2021, which is higher than the Central Bank of Kenya’s target range of 2.5% to 7.5%. This means that the purchasing power of Kenyans’ savings is eroded by the rising cost of living, making it harder to save for the future.
Lack of financial literacy: According to a survey by FinAccess, only 34% of Kenyans have a formal savings account, while 40% save informally, such as in a group or at home, and 26% do not save at all. This indicates that many Kenyans lack the knowledge and skills to manage their finances effectively and to choose the best savings options for their needs.
How can NSSF help Kenyans to save for their social security?
The National Social Security Fund (NSSF) is a statutory body that provides social security benefits to Kenyans in the formal and informal employment sectors. The NSSF aims to ensure that every Kenyan has access to a secure and dignified retirement, as well as protection from contingencies such as sickness, disability, or death.
The NSSF offers several benefits to its members, such as: