The Power of Saving UGX5000 Per Day

Savings Digest - Issue 1

Full magazine

Think about it, what can UGX5000 do for you in today’s market? Perhaps, a well-wrapped rolex and a drink or a meal? Not much, right? Wrong.

Do you know that if you saved UGX5000 shillings a day with NSSF’s Smartlife Flexi, you could buy your dream piece of land, or make a deposit on your dream car?  It is all in the power of compounding. Smartlife Flexi gives members a chance to earn daily returns on their savings while allowing them to save as frequently as they can.

The power of compounding

If you started saving UGX5000 daily, you would raise UGX6.3 million in 3 years. 

The projections also show that savers gain more when they save for periods greater than one year because their money has more time to compound in comparison to shorter saving periods. For example, for any amount of saving, Interest will be at least 41% of the total cash out at the end of 10 years of a consistent saving journey. Interest will be 22% of the cash out for savers on a 5-year plan while it will form 10% of the cash out for savers on a 2-year saving plan.

For instance, saving 5000 in 5 years would total UGX11.8 million and UGX31.3 million in 10 years. Now compare with alternative saving vehicles such as real estate, animals, or any other active business.

This only goes to show that there is little money. NSSF’s Smartlife Flexi product was designed to allow members to start saving from a manageable denomination. Uganda’s domestic savings to GDP is only 11% currently, yet with initiatives like Smartlife Flexi, we can grow our savings culture.

Frequency and consistency are key

Like anything in life, being consistent is associated with success. Be consistent in your actions and you will reap eventually. Our projections show that members are better off depositing more frequently earlier in their saving journey so that they have more deposits in the account to benefit from the daily compounding.

For example, saving Ugx 5,000 daily for 3 years gives a member a cash out of Ugx 6.38 million while saving an equivalent Ugx150,000 monthly for 3 years would give a member Ugx 6.30 million, a difference Ugx 80,000.  Why? Because more frequent deposits allow your money to compound faster. The earlier and more consistently you save, the more your money works for you.

While Smartlife gives members flexibility of entry and exit, customers gain more from saving consistently for longer periods because they will accumulate a bigger deposit which will also earn more interest due to compounding for a longer period.

Smartlife Flexi provides members with flexibility and the opportunity to save as low as UGX5000. To view your projections based on your daily, monthly or annual savings, download our free template here.

For more information, visit www.nssfug.org or call 0800 286 773. NSSF SmartLife—empowering Ugandans, one contribution at a time.