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The power of pennies: Why every random shilling counts

The power of pennies: Why every random shilling counts

Making a habit of saving every penny fosters a healthy saving culture over time. If a beggar walked up to you on the street today, what are the chances of you giving them Sh1,000 or even Sh200?

To many average Kenyans, the chances are slim to none. But they will have no qualms giving out a random Sh5 or Sh20 coin.

For some, this is a way of decluttering their pockets or handbags.

Little wonder, then, says Personal Finance Academy Chief Executive Wahome Ngari, shoppers complain if their change is traded for sweets at a supermarket or the bus conductor conveniently forgets to give you back your Sh10 change. READ MORE

Mr Ngari agrees that many people have little regard for coins.

“If you found Sh1 on the ground, chances are you will not bend to pick it,” he says, adding that sometimes we do not know the value of that shilling.

“If you took away Sh1 from the Sh10, it will no longer be Sh10. If you had Sh1,000 and removed Sh10, it cannot be Sh1,000, the same as when you deduct Sh100 from Sh1 million. That little coin counts because it makes the whole be complete,” says Ngari.

He hypothesises that if you saved Sh1 monthly on compound interest for 25 years and invested it in a fund, you would get a 12 per cent return, which would roughly come to Sh3,600.

If you saved Sh10 under the same terms, it would earn you Sh36,000.

“For many people, that is more than their monthly rent… but we do not see that,” says Ngari.

If you saved Sh100, it would come to Sh360,000 in the same period, which is enough to get you an old car or a piece of land somewhere, pay college fees or take a trip out of the country.“But how often do we lose Sh100 here and there?” he poses.If you push this figure to Sh1,000, Ngari notes, it would rake you in Sh3.6 million, which is enough to buy a new car, a house or pay university fees for your children.But why is maintaining such financial discipline difficult for many people?“It is because we do not value what it [the shilling] can do. If you lost Sh10, I don’t think you would walk back trying to find it,” says Ngari.“Over time that becomes a very big leakage and that (leakage) gets us not to do the things we could be able to […]

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