It is often said that having no financial plan is equivalent to having a bad plan for your life. This is more especially when it comes to having a savings plan to put aside some money over time for future use.

More often, people work for years, but when the time for retirement approaches, there is nothing to show for all the period they have been working. With savings, one is empowered to acquire other assents and also improve their standards of living, as well as their communities. Reality check: you have been earning say, Rwf500,000 per month on average for the last five years, but you don’t have any single asset to your name; you are still renting and all you have is accumulated debts and a hand-to-mouth kind of life. This being the time when most people make resolutions for the year, it is therefore, time for a total financial reflection and revision.

To help you along, Business Times sought out financial experts and individuals to share their thoughts and experiences regarding financial planning, and what would make a better savings plan.

Matthew Nikuze, a financial analyst with six years of experience in the sector, says saving money is easier said than done, noting that people keep postponing it until it is too late and they have sank into debt or have no savings to cater for emergencies. He challenges Rwandans, especially the children and youth, to cultivate a savings culture and financial discipline if they are to ensure a better future for themselves and families. 

"For starters, examine your expenditures, and then cut expenses that are not essential say, reducing on the amount of beer you consume per week,” he explains.

"Besides, depositing a small portion of your earnings on a savings account can make a financial difference as it accumulates interest. Remember, no money is small because some people claim that savings accounts accrue minimal interest. You must also set reasonable savings goals and track them over time to ensure you are not derailed along the way.”

For a banker, like Jessica Mutoni, there is no better savings plan than buying or investing in assets like land, cattle, goats or even chicken and buying shares in firms listed on the local stock market. The other saving options should work as a plan B, she adds.

"Expenses increase every day, and as long as you carry your ATM or credit card in your wallet; the money on the account is already as good as gone. One is, therefore, better off if they save such money in assets. Look for an appreciating asset and buy it instead of keeping money on your account. Even when you have accumulated some savings, you can always invest the cash in other assets that will help you get more money,” she says.

Mutoni says, from her personal experience, investing in assets, like land, does not only pay off in a short period, but also motivates you to work hard and acquire more assets.  

However, according to experts, buying assets is not enough; valuable and income generating assets requires a clear financial eye and planning.

Frederick Kalimba, an investment analyst, says accumulating assets does not mean you are ‘strategically’ wealthy.

"There is no doubt that buying high-yielding assets is a better investment, and a strategic way to save money. However, measuring your wealth by the value of your assets is a wrong approach regarding savings. Put in mind that markets change, and value fluctuates. I think it is financially wise to measure your wealth by the amount of cash flow your assets steadily generate,” he argues.

Kalimba urges people with valuable assets, to use them to generate more income. He believes that an asset that does not generate revenue slows a realistic savings plan.

For people who withdraw all their salaries immediately after they are deposited on their accounts, there is hope that they can also make savings a reality. Different companies have put several savings options to promote employee savings schemes. 

Kellen Abera, a human resource manager in an investment company in town, says such workers can still make most out of savings.

"They should approach their human resources officers to help them save some portion of their salary monthly. This is an ultimate solution because it gives the saver less access to their savings, which is a good savings plan,” she says.

The different investors interviewed by Business Times, say the first step toward savings creation is to have a clear financial budget, arguing that this enables you to set clear savings goals, and also helps keep track of your expenses, thus ensuring financial discipline.

One common mistake most people make is to think that you save what’s left after settling your expenses. Vedaste Karangwa, the father of two, says the best way is to make savings a sort of rewarding culture, and not a burden.

"If the savings culture is to be successful, people need to graduate from the unfriendly approach of saving what’s left of their income. Saving is a commitment and goal, and in order to achieve it, one commits to setting aside a portion of their salaries as savings before any reductions are done,” he counsels.

As a way to promote the culture of saving, Karangwa encourages parents to teach their children to save at young age, for instance, by keeping piggy banks, family saving baskets or even open bank accounts for them. He believes this would also instill a financial discipline in children, and also help them plan for their future.

While some people still say they do not need to save since they have stable careers, the realities of life paint a different picture, especially when uncertainties knock at your door.

People who have reaped big from savings plans told Business Times that saving part of your income for a rainy day, and other unforeseen expenses, is like creating a crisis fund so that if something goes wrong, you are financially prepared to handle it instead of running around seeking money from loan sharks.

What others say

Jackline Mukacyimayire, entrepreneur

Saving on a bank accounbt is tempting since one can easily access it. So I think investing in valuable assets is a better and effective way to save. Some assets have low risks and appreciate easily. For instance, land, or building rentals. These saving avenues can help you to easeily recoup the capital invested in a short period.

Jean Bosco Muneza, businessman

Saving is about creating financial discipline and requires a lot of commitment. It is also important to diversify your sources of income and ensure a steady income stream. Opening a ‘retricted’ savings account is a better way to save, but it’s also wise to invest in profitable businesses as this boosts your earnings, and savings.  

Cypriene Nkundimana, vendor

Apart from opening a savings account, it’s also important to look for ways to cut your costs. There are expenses that can be minimised; for instance, outings and family trips, transport costs, clothing, among others. Cutting the costs of each item on your list can leave you with a sizeable amount monthly to boost your savings.

Jean Paul Ngendahimana, entrepreneur

We live in a professional world, and people have different skills. So, when you start struggling with your savings plan, it’s better to seek assistance from an expert. Financial experts can help you design a plan that can make saving a reality. Such people can guide you on a strategic savings plan that befits your earning and aspirations.