Navigating financial terrain in the modern world using Saccos
In the dynamic landscape of personal finance, young adults are often faced with the challenge of managing their money wisely. As they embark on a journey of financial independence, you find that some financial institutions may not always serve their needs effectively. A great number of youths face barriers to accessing affordable credit or they lack sufficient savings to feel financially secure. However, in the past few years, savings and credit co-operative societies (Saccos) have emerged as a powerful financial tool, offering many benefits tailored to the unique needs of today’s youth.
Essentially, Saccos are member-owned organizations that provide accessible savings and credit products. Unlike most financial institutions, Saccos do not focus on profit maximization. On the contrary, their main objective is offering a wide array of innovative products and services to members at competitive terms. Membership in most Saccos is open to all Kenyans regardless of their status and affiliation among other factors. To become a member, one registers and gets a number by buying the minimum required share capital in accordance with the Sacco’s by-laws. For young adults struggling to build assets and become financially independent, it is advisable for them to join Saccos given their unique benefits.
Friendly membership requirements
Saccos are known for their inclusive approach to financial services. They have a more friendly membership criteria, allowing a broader range of individuals to join. This inclusivity is particularly beneficial for people who may face challenges meeting the strict requirements of the mainstream financial institutions. Opening a Sacco’s savings account often requires a little minimum deposit, compared to back breaking processes imposed in some financial institutions which end up locking out individuals with limited financial resources. In Saccos, the application process is simple. It is easy for one to register – whether physically or using the online procedure. This allows young people with limited incomes to begin building their savings and ultimately accessing credit and becoming financially independent.
The National Chairman, Kenya National Police DT Sacco Mr. David Mategwa receiving the Best Managed Sacco Countrywide trophy from H.E Dr. William Samoei Ruto, Kenya’s President during the National Ushirika Day Celebration-2023.
Opportunities to build credit history
One of the primary benefits of Saccos is the provision of affordable credit options. Youths often face challenges when seeking loans from traditional financial institutions. Not only do they struggle to obtain credit cards but also getting loans is hectic for them due to lack of proper credit histories. Saccos, on the other hand make reasonable loans available specifically to help members build healthy credit profiles for the future. By repaying their loans on time, members are able to boost their credit scores thus increasing their future borrowing power.
Saccos offer a more inclusive approach, by providing members with access to credit at competitive interest rates. This empowers the youth to fund their education, start businesses or make significant investments without being over burdened by extremely high interest charges. Some Saccos may consider a broader range of credit history. In some cases, they might be considerate of past financial challenges. This flexibility can be crucial for individuals who may have had challenges accessing credit from mainstream lenders due to a poor credit history.
Saccos play a crucial role in promoting financial education among the youth. Through workshops, seminars and retreats, Saccos empower members with the knowledge and skills needed to make informed financial decisions. In line with the co-operatives’ principles, one of their mandate entails education of members on smart budgeting, savings, borrowing and managing money wisely. Young adults often lack this type of guidance. This commitment made by Saccos to financial literacy ensures that young adults are equipped to navigate the complexities of personal finance confidently.
Financially literate youths are encouraged to have a disciplined savings culture through regular contributions and savings plan .They are hence able to develop a habit of setting aside funds for future goals. Notably, the contributions to Saccos by salaried individuals are deducted from their pay slips. This instills financial discipline at an early stage, setting the foundation for a secure and prosperous financial future.
Access to emergency funds
Access to emergency funds is a crucial benefit offered by many Saccos. They play a significant role in providing financial security and support to their members during unexpected and challenging situations. Qualifying for a Sacco loan when funds are needed urgently is generally easier and quicker as opposed to other financial institutions. This helps young people dealing with unexpected costs avoid predatory lenders who take advantage of their desperation. Saccos often prioritize efficiency and member service. Therefore, members can access their funds relatively quickly in times of emergencies.
Most Saccos (if not all) offer a wide array of savings products, some of which are designed specifically to cater for emergency situations. Members may have access to savings products with features like easy withdrawal options or low penalties for early withdrawals during emergencies. In this case, you find that members can leverage mobile apps that facilitate deposits, withdrawals or even check their balances.Saccos often work closely with their members to customize loan terms based on individual needs. This flexibility has allowed members to structure their loans in a way that suits their financial needs, making it easier to manage repayments even in emergency situations.
Networking and collaboration
Beyond financial services, Saccos foster a sense of collaboration among members. By joining a Sacco, young people can become part of a network that shares common financial goals. This network provides opportunities for mentorship, business partnerships and collaborative initiatives that can significantly enhance the career and financial prospects in the long term.
As youths navigate the complexities of the modern financial landscape, being a member of a Sacco emerges as an invaluable decision in their journey towards financial freedom. From fostering financial literacy to providing affordable credit options and promoting a savings culture, the benefits of a Sacco extend far beyond conventional financial institutions. As youths look for institutions that will guide them to financial prosperity, member-owned Saccos are ready to provide informed financial guidance and resources. Embracing the power of Sacco can pave way for a prosperous and empowered future for today’s youth.