Ways of saving money without going to banks

Usually if one needs to save money, the assumption is to open a savings account in a commercial bank.
What are considered savings accounts in commercial banks are really not because one can withdraw all the money from the bank account.
These “savings” are considered short term and commercial banks cannot rely on such money to extend long-term credit to the private sector.
The savings rates in the country are also said to be low at about 5 per cent of Gross Domestic Product. When that is mentioned, it is in the context of the unbanked population – the people who don’t have bank accounts at all.
There has also been another complaint from commercial banks and other policy makers that Uganda lacks long-term financing that would unlock agricultural sector and the housing sector.

Opt for life insurance
Where there is the talk of insurance in Uganda, the most common is Motor Third Party Insurance or other policies that protect property but not individuals.
A life insurance policy is taken out on an individual from monthly deductions for a period of three years or till death or retirement or depending on the choice of the policyholder.
“Life insurance is a savings product and from day one, you and your beneficiary are protected. This is your money that you are saving with us and as soon as your policy expires, then you are entitled to the money plus a return made from your investment,” says Mr Arjun Mallik, the chief executive officer (CEO), Prudential Assurance Uganda.

There are several policies being sold by insurance firms in the country. For instance, UAP has a life insurance policy known as “Somesa Plus”. This allows one to save money on a monthly basis for a given period and draw down on it for payment of school fees once the child starts school.
When the insurer gets the money, it is invested in government securities, fixed deposit accounts in commercial banks, shares in companies and property.
It is this money that will end up in commercial banks as long-term financing for projects. That explains why the policies also often indicate a projected rate of return on the savings.
Currently, there is about Shs133 billion being held in life insurance policies in Uganda according to the Insurance Regulatory Authority.
Contrary to popular belief, one doesn’t have to die for a policy payment to be made.

Join a retirement scheme
Uganda has a working population of about 17 million people. Less than 15 per cent of these people are part of a retirement benefits scheme.
Even some of those are part of a Public Service Pension Scheme that one receives after retirement – upon the availability of money from the Consolidated Fund in government.
However, there are options of putting money aside through a retirement scheme without having to rely on government bureaucrats to sort your paperwork and disburse payment.
“We have seen our scheme grow to Shs230m in the last 10 months. All we do is to encourage people to bring what they can on a daily or monthly basis and that money is saved for retirement,” Mr Livingstone Mukasa, the CEO, Mazima Voluntary Individual Retirement Benefits Scheme (MVRIBS), points out.
MVRIBS was started 10 months ago in order for people in the informal sector to save for their retirement. Since it is a voluntary scheme, even a teacher in public service can start saving money there on a monthly or even daily basis.
MVRIBS is managed by African Alliance, which is regulated by the Capital Markets Authority.

Uganda still has a high dependency ratio of 103 per cent. Retirement planning is also some form of long-term investment that can generate returns when one is out of work.
According to Mr David Nyakundi Bonyi, the CEO, Uganda Retirement Benefits Authority (URBRA), the Uganda market is dominated by the National Social Security Fund (NSSF) that targets people in formal employment and yet there are many more people that the NSSF does not reach.
Recently, the Kampala City Traders Association (Kacita) launched their own voluntary retirement benefits scheme after planning for it for the last two years. The traders association has recognised that they need to also plan for their retirement when they eventually leave their businesses.
Just like the NSSF, that money is invested in government securities, fixed deposits in commercial banks, corporate bonds and real-estate, among others.

The schemes are regulated by URBRA. For instance, before the Kacita scheme was licensed, URBRA had to ensure that fund management was separated from the main Kacita in order to protect people’s money and also allow professionals to make decisions on investment. Stanlib will be managing the fund.
Finally, on a tight budget, it really pays to save. Just in case you have forgotten the value of a hard-earned Shilling, there are a number of money-saving ideas to boost personal savings apart from the two just explained above.
Of course some tips from friends and money consultants save you more money than others, but we should learn how, when and where to save.

Importance of saving
Emergency: This could be any number of things: a new roof for your house, out-of-pocket medical expenses, or sudden loss of income. You will need money set aside for these emergencies to avoid going into debt to pay for your necessities.Retirement: If you intend to retire someday, you will probably need savings and/or investments to take the place of the income you will no longer get from your job. Education: Saving offsets costs for education of spouse, children and self.

What it means
The money that you keep, usually in a bank account, instead of spending it. It is always advisable for savers to ask their banks if they could make more money by moving their savings into other types of account. It is a process of setting aside a portion of current income for future use. But it can also be a reduction in time or money that is needed.