6 Types of Savings You Need

Financial advisors will tell you to budget your money in a 50:30:20 proportion. 50 stands for basic needs, 30 for wants, and 20 for savings and investments. Saving helps you cushion yourself against unforeseen future emergencies and meet future needs. Saving today will save you tomorrow.

1. Emergency Fund

Saving money helps to build an emergency fund that can cover unexpected expenses such as car repairs, medical bills, or home repairs. Having an emergency fund can help prevent financial stress and reduce the need to take on debt.

You need Ksh 100,000 set aside for eventualities such as car repairs, sickness and death in the family, and home repairs.

2. Unexpected Job Loss

No one knows the future. Saving three to six months' worth of your current expenses can help cushion the blow of an unexpected job loss or reduced work hours. You could also get into an accident that may hinder you from going on with your daily activities, including earning an income.

Without savings, you may struggle to pay bills, cover basic expenses, and maintain your lifestyle.

3. Retirement

Saving for retirement is crucial to ensuring you can maintain your standard of living when you are no longer working. Without savings, you may need to rely on government support or family members to make ends meet.

4. Financial Freedom

Saving money provides financial freedom and allows individuals to make choices that align with their values and goals. Having savings can reduce the need for high-interest loans or credit cards, enabling individuals to pursue their passions and interests without the burden of debt. You can also invest your savings in income-generating projects or investments that will help you achieve financial freedom.

5. Insurance Funds

You need to invest in insurance funds against events like death, accidents, and disability. This will help you and your family to maintain the same financial status if anything were to happen to you.

After apportioning your savings, knowing where to save is important. You will determine where to save based on the reason for saving. This article will guide you further.

6. Playing Money

"All work and no play makes Jack a dull boy."

As much as you want your future to be bright and prosperous, you also want to enjoy the journey. Not having an allowance to spoil yourself is what keeps you demotivated and distracts you from your saving journey. Why not make the journey exciting by setting aside some money to blow away every month? Of course, that also involves saving some huge sums to travel at the end of the year and have fun. It's somewhat of a reward for your hard work. You know the importance of personal discipline in adopting new habits