For years, financial advice has drilled one thing into our heads: Save your money. Everyone knows they have to save. And while that’s great advice, it’s also not enough. If you’re not intentional about how you save and don’t take the next step to invest, you’re letting your money rot.
To truly take control of your finances, you need to save smartly and invest wisely. Here’s how to do it.
1: Track Your Money (Every Shilling of It)
Before you can save or invest, you need to know exactly where your money is going. This means tracking every single expense, not just estimating.
It’s easy to assume you’re spending a reasonable amount on transport, groceries, and entertainment. But when you actually check your M-Pesa statements, bank transactions, or budget app, you might be shocked at how much is slipping through the cracks.
Tracking helps you see where you’re overspending and where you can cut back without feeling deprived. Use a budgeting app, a spreadsheet, or even a simple notebook and make sure you’re documenting every expense, down to the last shilling.
2: Cut Expenses That Don’t Serve You
Once you know where your money is going, it’s time to trim the fat. Are you spending more on takeout than you thought? Are subscriptions silently draining your account? Is impulse shopping your weakness?
Cutting expenses will redirect money toward what you want. If your spending is higher than your income, or if you’re barely saving anything, it’s time to make some adjustments.
3: Create a Budget That Works for You
Saving isn’t just keeping money in an account. That’s where budgeting comes in. One of the simplest budgeting methods is the 50/30/20 rule:
- 50% of your income goes to needs (rent, utilities, food, transport).
- 30% goes to wants (entertainment, travel, hobbies).
- 20% goes to savings and investments (your future self will thank you).
If you’re serious about growing wealth, you might want to flip the script—saving and investing 30% or more and cutting back on non-essentials. The key is to create a system you can stick with consistently.
4: Save with a Purpose
A big mistake people make is saving without a clear goal. Money sitting in an account without direction is too easy to spend. That’s why you need to divide your savings into specific funds, such as:
- Emergency Fund – For unexpected expenses like medical bills or car repairs. Aim for at least three to six months’ worth of expenses.
- Sinking Fund – For planned expenses like school fees, annual insurance, or home upgrades.
- Investment Fund – Money set aside to grow, whether in stocks, real estate, or business.
- Retirement Fund – The earlier you start, the better. Compound interest does wonders over time.
- Lifestyle Fund – For travel, entertainment, or major purchases (guilt-free spending).
When your savings have a purpose, it’s easier to stay disciplined.
5: Invest: Saving Alone Won’t Make You Rich
If you’re only saving and not investing, you’re losing money.
Inflation eats into your savings every year, meaning the money you have today will buy less in the future. The only way to stay ahead is to invest and let your money grow.
The easiest way to save money and invest simultaneously is through Unit Trust Funds like money market and fixed-income funds. These allow you to save money as you prepare to invest (in stocks, real estate, business, etc.) or implement your goals (like retirement, travel, school fees, etc.).
The key to investing is starting early and staying consistent. The longer your money is invested, the more it compounds.
Saving money is important, but saving without a plan is like running on a treadmill; there’s an illusion of movement.
