KIMISITU SACCO SOCIETY LIMITED
Members’ Education: Building Financial
Security through the Sacco
8th June 2013
Objectives

i)
ii)
iii)
iv)
To remind ourselves:
About the Steps to take to achieve Personal
Financial Security through your Sacco
About Accessibility, Utilization and Repayment
of Sacco Loans
The benefits of a Financially Secure
worker/spouse/father/mother
On how to deal with job Uncertainties of today
Financial Position “Tomorrow”
Irrespective of how much money one
earns today, his/her financial position
tomorrow depends: on his/her savings
and investment priorities today
Financial “Experts”

i)
ii)
Any one of us can qualify to be an expert in Financial
Management at home or in the Office
But one thing sticks out in life: many of us preach water
but drink wine when it comes to our Personal Financial
Management
Some of us (salaried) live from hand to mouth not
because:
a) We are poorly paid but
b) Because many of us argue that tomorrow will take care
of itself and so we consume extravagantly today and
forget about tomorrow
MONEY

i)
ii)
One of the most important items in our lives is money
With it, there is power, authority and influence and it
can bring a lot of comfort
Yet the same money can bring a lot of pain to some of
us who have it
a) Money can break up families: arrogance, coming
home late, sleeping out at will, overindulging in
alcohol/drugs/gambling/women/men, etc
b) Money makes us become targets for criminals, etc
Personal Financial Planning
Personal Financial Planning : Development
and Implementation of short to long-term
plans to achieve Financial Security for self
and family:
NB: Anybody who consumes everything
she/he earns is actually committing
ECONOMIC SUICIDE: the sad thing is that
many salaried people fall in this category
Job security Vs Financial Security
If we lost our jobs/businesses today, can
we maintain our current standards of living
for at least the next six months without
serious financial difficulties when still
looking for another job/business?
NB: The naked truth is that a significant
majority of salaried people cannot survive
for two months
What is Financial Security
a)
b)
Achievement of a state of being able to
access within your means what money can
buy:
You can earn Ksh. 50,000 monthly and be
financially secure at that level
You can earn Ksh. 400,000 monthly but be
very insecure financially
Is Jonathan Financially Secure?
He lives in a good estate/house and pays
his rent in good time
ii) He maintains balanced diet for his family
iii) He drives a nice family car
iv) His family accesses good medical services
whenever they are sick
v) The family dresses well
i)
Financial Security: Savings and Investment
Financial Security comes as a result of:
i) Well planned personal savings over a
period of time &
ii) Prudent Investment Schemes one
undertakes over some period of time
NB: For many salaried people, the Sacco has
been the main source: savings mobilization
and provision of affordable credit
Nobody knows about tomorrow: 1
Now we have a job: tomorrow it may be
gone
Q: What insurance do we have for
tomorrow if the job goes: retired,
retrenched, sacked: Save more in the
Sacco now then borrow and invest
wisely
Nobody knows about tomorrow: 2
 For
those working in donor funded projects:
Now the donor funds are available,
tomorrow the donor cuts off the funding and
the jobs are gone:
Q: What do we do if the taps to donor funding
go dry before the project/contract period?:
Save more in the Sacco now then borrow
and invest wisely
Nobody knows about tomorrow: 3
Now we have a thriving business:
tomorrow it may be gone
Q: What do we do tomorrow if the business
ceases to exist?
(fire guts premises, you are declared
bankrupt or thieves loot your premises):
Save more in the Sacco now then borrow
and invest wisely
Nobody knows about tomorrow: 4
Now we have a moneyed spouse:
tomorrow she/he may be gone
Q: What do we do tomorrow if the moneyed
spouse got sacked, died, got ill, got
married off to another person or divorced
you: Save more in the Sacco now then
borrow and invest wisely
Financial Planning: Managing your debts
i)
ii)
Do your debts cause you stress &
sleeplessness at times?
Can your debts bring a lot of pain to your
family should you lose your job/business
or the Lord calls you home?
Auctioneers/Creditors
Are we living false lifestyles: heavily financed by
loans
Rent we pay for the houses we live in for those
who do not own their house
ii) Vehicles we drive
iii) Where our children go to school
iv) For those who drink, the type of drinks we take:
beers, wines, other spirits
NB: Loans are good but only if they are used to
create wealth
i)
Life Circle for most of us Vs Financial Security
0 – 25 yrs: we are dependants
 26 – 30 yrs: we are out of college, looking for a job or working
 31 – 40 yrs: married and having babies, looking after them
 40 yrs and above: no more babies: taking care of the ones
already born
50 yrs and above:
 NEVER have any child in Primary School: it is suicidal
 You are blessed more if living in your own house
 You have established our rural homes if we intend to retire
home finally
 Fees burden for our children if any should be dwindling to zero
NB: Otherwise we may run into financial trouble when we retire

A “Crying” Net Salary
Net salary which:
i) Does not bring smile to a worker’s face
ii) Brings dishonor to one: In late 1970s an MP
committed suicide because a crying net salary
iii) Pushes one to go for an advance or
emergency loan a week after pay day
NB: Such a person is on her/his way to being
declared bankrupt: a liability to the Sacco,
employer and family

Savings at the Sacco: Unwithdrawable
Deposits
Boost your monthly unwithdrawable
deposits at the Sacco now so that you smile
all the way to the bank tomorrow:
Avoid being Mr/Mrs/Miss/Ms Minimum
Contributor
Jane & Jemimah
Jane who is in this Sacco has said NEVER to
increasing minimum monthly contributions, which is
currently Ksh. 3,000
ii) Jemimah who is also a Member here has accepted to
increase her monthly deposits from Ksh. 3,000 to 7,000
iii) In 3 years time, Jane and Jemimah have deposited
Ksh. 108,000 and Ksh. 252,000, respectively in the
Sacco.
Q: An expatriate going back to his country is selling a
prime plot at Ksh. 750,000. Who between the two will
qualify for a loan from this Sacco and purchase this
property?
i)
Other Forms of Savings: Walking towards
Financial Security
i)
ii)
iii)
iv)
v)
If you have a car, avoiding driving if you can:
some of us are addicted to our cars
Avoiding taking self or children and to high cost
schools or colleges if it is a major strain on you
Using credit cards only if it is necessary and
you have the financial ability to pay as you use
it. Many of us have been made slaves because
of credit card debts
Window shopping: buy quality but cheaply
If you have a big project, purchase items in bulk
Some Forms of Investment: Walking towards Financial
Security
i) Money invested in shares & stocks of reputable
companies
ii) Money invested in Treasury Bills & Bonds
iii) Money invested in income generating ventures, eg
SMEs (Small and Medium Enterprises:
supermarkets, petrol stations, restaurants, schools,
posho mills, farming, etc
iv) Investing in real estate
v) Investing in Unit Trusts, etc
Economic disparities through organized
savings & Investment
Mr. Talas is a Sales Clerk and earns Ksh. 40,000 per month
ii) Mr. Kodip is an accountant and earns Ksh. 250,000 per month
iii) These two people are members of a Sacco and have worked for 13
years each
iv) Mr. Talas has bought a five acre farm where he grows maize, put up
a nice house and has dairy cattle and two posho mills through Sacco
loans
v) Mr. Kodip drives a state of the art car, pays Ksh. 50,000 monthly rent
in an up-market estate. He and his family live large now
NB: Mr. Talas has saved a lot in the Sacco, accessed Sacco loans and
used the same well because he has postponed none-essential
consumption now for a better more enjoyable life tomorrow
i)
Helping your Sacco to Create Wealth
Mobilize huge deposits
ii) Patronize the Sacco as many times as you can
iii) Borrow and invest wisely then Service your loans as and
when they fall due
iv) If you had a FOSA then nobody would take a loan through a
chq then deposit that chq in another Financial Institution
NB: The Sacco will make more surplus and have more in store
for the Members
i)
Do not be a Liability to Guarantors


Do not make any of your guarantors to carry your
financial obligations: pay up all your loans:
Who said that if you lose your job then you pass
over your liabilities to your Loan Guarantors
Do not take a loan if there are strong rumors that
retrenchment is at the corner, the donors are just
about to suspend funding the project where you are
working or you have received your second written
warning letter, unless your own deposits are
adequate to secure the entire debt
Attitude towards saving now

i)
ii)
iii)
iv)
v)
Some people do not want to increase their
savings and they have been heard saying:
My salary is still not where I want it to be
I will start saving when I have a spouse and child
My spouse is saving for us
I will inherit my parent’s properties
I came to this world naked, and naked I will
return to my maker, so why this stress of
increasing my savings?
When & Why take a Sacco loan
i)
ii)
iii)
iv)
v)
vi)
vii)
Take a loan only after identifying a feasible project
Take a loan only if your salary can allow you to have reasonable
net
Never take a loan because you have already cleared the
previous loans
Never take a loan because the Sacco has surplus funds to lend
Avoid taking development loan but use it for consumables
Never take a loan for raha – women/men, alcohol, tourism,
gambling
Never kill yourself with loans by borrowing money from
everywhere: Sacco, Commercial bank, MFI, Shyloc
Conclusion
i)
ii)
iii)
Personal Financial Management is all about
financial discipline. It starts with what your vision
is for self and family both in the short and long run
Good Personal Financial Management helps in
Sacco growth as loans will be used well and
repayments done in good time
This discipline makes you an asset to the family,
your employer and the nation at large because
through savings, you mobilize funds for
investment which helps in economic growth