Tuesday, August 16, 2022

Chacha Nyaigoti: The good and bad of saving money in Saccos

Chacha Nyaigoti Bichang’a is a lecturer, trade unionist, mentor, and the founder of Chachanomics Limited, a mentorship and financial consultancy firm.

Partnerships can be bottomless money pits if you don’t do due diligence. I once put a lot of money in a partnership project that did not yield the expected returns. I pumped in more money thinking that the business could improve. I did not know that in business, much more than capital is a prerequisite for success. I even bought out one of the partners, but this created more problems as the other remaining partner did not like the buyout. We quarrelled and even fought over control of the business. As a result, the business lost credibility and clients. We were left licking our wounds especially myself as the biggest contributor.

I have been saving through a Sacco for many years. I save through check offs which earn me good dividends at the end of every financial year. This method allows me to access loans that I guarantee using my savings. Although this method has been fairly effective, there is a time I incurred financial loss on account of guaranteeing members who ended up defaulting on their loans. Guaranteeing someone a loan means that you’ll be liable to repay if they default. Be careful on whose loan you guarantee.

Saving money through the Sacco is not always the best route. It has its downside too. For example, it will not be very helpful in the event where you have an emergency, and don’t have a separate emergency fund kitty or account. You may end up being forced to apply for an emergency loan instead of withdrawing your own savings.

The best way to save for emergencies is through unit trusts such as the money market fund. I make regular monthly deposits and any windfall that comes my way because money market fund is easily accessible. It also pays better returns than saving in a bank. I also invest in shares (risky but offers better returns on the investment) and government securities (safe, secure and offers better returns instead of money lying idle in a bank account).

The road to financial freedom is neither easy nor straightforward. It calls for persistence, integrity, focus and steely determination to achieve the ultimate goal. I have learned from my mentors and coaches that I should devote valuable time to acquire vital life skills, networks and keep on improving myself. In business, doing the right thing the right way the first time is paramount. It is important to put in the required legal structures in any business venture. Do not just trust your instincts. Verify whatever you are told and make well-informed decisions when venturing out.

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Self-discipline is the only way to achieving financial freedom. You can say you’ll create a budget, save 30 per cent of your earnings, and invest wisely, but without self-discipline, it will all amount to naught. I have also observed that many of us are peculiarly prone to fall prey to get-rich-quick schemes. We also easily get trapped in huge debts that we can hardly manage to repay. We need to stop being an impatient people, sweat it out and follow the long road.

For a long time, I struggled to gain financial freedom. Then I came up with a five year plan. In this plan, I embarked on a reading journey, through which I collected and consumed hundreds of personal finance journals, magazines, books and articles. I also started attending coaching programmes on how money works and how I could be better at handling it. After the five years of investing in myself, I started teaching my family, friends, colleagues and clients about the financial lessons I had learned. This gave birth to my company and my debut book known as Mastering Your Money. The book captured my experience with money from childhood to adulthood.

This profile feature on Chacha Nyaigoti was first published in the Saturday Magazine. The Saturday Magazine is a publication of the Nation Media Group.

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