Strategies for smart saving during tough economic times

Create a budget tailored to the current economic reality. [iStockphoto]

In recent months, Kenyans have been facing a challenging economic environment characterised by a devalued shilling, skyrocketing fuel prices, increased taxation, and an overall rise in the cost of living.

In these tough times, it becomes crucial for individuals and households to adopt prudent financial strategies to weather the storm. While it might seem daunting, there are concrete steps that can be taken to navigate these tough economic waters and continue saving effectively.

Firstly, it is essential to create a budget tailored to the current economic reality. Analyse your income, list your essential expenses, and identify areas where you can cut costs. Prioritise necessities like housing, food, and healthcare while reconsidering non-essential expenses. By having a clear understanding of your financial inflows and outflows, you can make informed decisions about where to save and where to spend.

Another key strategy to consider during tough economic times is asset rationalisation. This involves assessing your assets, both tangible and intangible and making decisions to optimise their utility and generate revenue. Many of us have assets that lie dormant and unused, from unused household items to vacant properties in our rural homes.

Consider renting out that home in up country or even putting it up as a holiday home to generate additional income. The sharing economy, facilitated by platforms like Airbnb and car-sharing services, offers an opportunity to turn your idle assets into cash. This not only generates revenue but also contributes to the broader economy.

Additionally, a cluttered home often hides valuable items that are no longer of use to you. Consider decluttering your space and selling items through online platforms or local markets. The proceeds from these sales can boost your savings or help cover essential expenses.

Transportation costs, especially in the face of rising fuel prices, can significantly impact your budget. As such, you should consider using public transportation or carpooling to work and other daily destinations. Public transit is often more cost-effective than driving your own vehicle, and carpooling reduces fuel expenses while contributing to a greener environment. At the moment, many cities in Kenya are improving their public transportation systems, making them more efficient and affordable.

If you must drive, opt for fuel-efficient vehicles. Modern vehicles are designed to be more fuel-efficient, saving you money in the long run.

Moreover, it is paramount that you stay informed and adapt your saving strategies. Keep an eye on market trends, inflation rates, and government policies that might impact your finances. Being aware of the economic landscape allows you to adjust your savings plan accordingly.

For instance, if interest rates are rising, consider fixed-term deposits or other interest-bearing savings options to maximise your earnings. An example of such is the Jubilee Asset Management money market fund. Our company offers a robust MMF solution that provides not only security but also competitive returns.

The Jubilee Asset Management money market fund is designed to weather economic uncertainties, offering a reliable avenue for Kenyans to grow their savings. By investing in our fund, individuals can harness the expertise of seasoned professionals, ensuring their investments are managed with prudence and care.

This secure investment option acts as a shield against the unpredictable economic climate, providing a stable foundation upon which to build one's financial future.

And finally, I believe one of the incomparable ways of ensuring you continue saving is by simply diversifying your sources of income. In theory, it is said that the general rule of thumb is that a person should have at least three sources of income. Of course, this is easier said than done, but can still be achievable through the gig economy.

The gig economy, a global phenomenon gaining remarkable traction in Kenya, offers a myriad of opportunities for individuals to supplement their primary income. In an era dominated by digital innovation, freelance opportunities, part-time work, and online businesses have become more accessible than ever before. Embracing this digital frontier allows individuals to leverage their skills and interests, transforming hobbies into profitable ventures and passions into pay checks.

The beauty of the digital landscape lies in its inclusivity; anyone with a skill or talent can find a niche market online. From graphic design to content creation, programming to online tutoring, the options are as vast as one's imagination. By tapping into these avenues, individuals not only augment their earnings but also create a safety net, a financial cushion that softens the impact of economic downturns and unexpected expenses.

While the current economic situation presents significant challenges, adopting a proactive and informed approach can empower individuals to continue saving effectively. By creating a realistic budget, diversifying investments, embracing frugality, staying informed and exploring additional income sources, Kenyans can build a secure financial future despite the economic uncertainties.

It is through resilience, adaptability, and financial literacy that individuals can weather these tough economic waters and emerge stronger on the other side.

The writer is the Group CEO of Jubilee Holdings