The new year is upon us and there is no time like now to work on renewing your financial-related resolutions. Whether you plan to save more, invest more, or improve your financial literacy, there are a lot of institutions and resources both online and in person that could be of great help. One of the places you could consider turning to for some of your 2024 financial resolutions is a Sacco.
Savings and Credit Co-Operative (SACCO) has been around for a very long time.
The main purpose of its creation was to mobilise member’s funds and grant credit for its member’s development. A Sacco by definition is an association of like-minded people or people who share a common bond, such as employees working in the same organisation or residents of a particular community. This shared background allows for a level of understanding that can be valuable when making decisions that concern the Sacco i.e. investing in local businesses or projects.
Here are five reasons why you should consider joining a Sacco in 2024
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Most Saccos offer financial literacy programs to its members. This is one way you can learn about financial management, investment opportunities, and saving strategies. The trainings Saccos offer to their members not only helps them improve their understanding of financial concepts but also promotes financial inclusion, in the sense that the members are now well equipped with the knowledge and know-how of how to save and invest wisely.
In addition to financial literacy programs, Some Saccos also offer business development training on how to start and run a business. This helps members improve their entrepreneurial skills and increases their chances of success.
Access to affordable credit is by far one of the most significant advantages of joining a Sacco. Saccos provide its members with loans at competitive interest rates, usually lower than what is offered at traditional financial institutions. So you don’t have to struggle with the burden of paying off a high-interest loan.
Saccos are known to charge very low interest rates some averaging at 1% per month when compared to banks and other financial institutions.
With such rates, you can save more and invest more, their repayment is manageable and you can sleep well knowing that nothing will change during the repayment period.
Saccos savings and lending plans are tailored to fit members’ ability to pay hence making it easier to save and borrow money.
Whether you need funds to finance your education, buy a house, or expand your business, Saccos are great accessible cost-effective solutions that could cater to some of your financial needs.
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According to the World Bank, financial inclusion is when people and businesses have access to useful and affordable financial goods and services that meet their needs including transactions, payments, savings, credit, and insurance that are provided in a responsible and sustainable way. Access to a transaction account is a first step toward broader financial inclusion since it allows people to store money and send and receive it.
Financial inclusion boosts savings, encourages entrepreneurship, and broadens investment options, all of which support economic growth. It increases consumer spending and can lead to the establishment and growth of businesses, which results in increased productivity and the creation of jobs.
Saccos are often open to having members from all walks of life including people who may have limited access to mainstream financial services. Saccos serve people excluded from traditional banking services such as low-income earners, small business owners, and rural communities. Members can access credit using their deposits and the security of guarantors without having to provide collateral. Joining a Sacco gives one a chance to be part of the formal financial sector.
If you have been struggling to put money away or to save money then a Sacco might help with that. Saccos operate in such a way that instills a saving culture in its members.
Saccos usually requires a minimum monthly contribution from its members. This monthly contribution helps to instill a saving discipline. This money is not accessible to the members unless they decide to take it out from the Sacco or take out a loan. This not only protects the member’s savings but also prevents impulse spending.
Saccos are not only a good place to stash money away but also offer its members investment opportunities as well. Saccos are development-oriented, meaning it’s a great place to turn to when you are looking to make an investment. Saccos provide investment opportunities in various forms. Saccos may invest in government securities such as treasury bills and bonds. They may invest in real estate either directly or indirectly as authorized by the by-laws. Real estate investments may offer long-term capital appreciation and rental income. A Sacco may also engage in business ventures or partnerships that are in line with the Sacco’s mission and objectives.
Through your Sacco membership, you can get a loan, that could be used to invest in buying a home, commercial buildings, or a car. A bonus to this financial arrangement is the low interest rates on Sacco loans. The low interest allows you to focus on building an investment portfolio and not worrying about how to pay back the loan.
Wealth maximization is a key objective whenever Saccos choose an investment avenue from a large pool of possible investment vehicles.
You can rest easy, knowing that your money will not disappear like a coin or a small ball during a magic trick. Saccos are regulated by The Saccos Societies Regulatory Authority (SASRA) to ensure the safety of member’s funds.
Saccos are guided by strict regulations and guidelines that are set up by the Commissioner of Co-operative Development as a way of protecting member interests. Frequent audits and reports also ensure the financial health and stability of the Sacco. And also helps identify and address any financial irregularities. You can rest assured that your savings and investments are in safe hands.
Saccos are democratic in nature so as a member of a Sacco you have the right to attend and be a part of the decision-making at every general meeting the society has. Members also elect a board of directors that oversees the management of the Sacco. This democratic way of doing things helps ensure that there is transparency and accountability.
Even though Saccos are generally considered trustworthy financial institutions, it is still important that you do your due diligence before joining. As a prospective member consider reviewing the sacco’s financial reports, governance structure, and regulatory compliance to ensure it aligns with expectations.