Why and Where to Save

15 min

Let's begin

Niyonzima gets 500 Frw from his uncle every weekend. He dreams of a 12 000 Frw football. His older sister says, "If you save every coin, you will have it in 24 weeks. But where will you keep the money all that time?"

Why people save

To be ready for things they know are coming, such as school fees, school materials or Christmas and Eid.
To be ready for surprises, such as illness or a broken roof.
To buy something big that costs more than one month's money, like a bicycle, a cow or a sewing machine.
To start or grow a small business.

A budget comes first

A budget is a plan for how you will spend and save your money. Write down the money coming in, then list what you must spend, and see what is left to save.

Worked example

Mutesi's family earns 150 000 Frw a month. They plan to spend 60 000 Frw on food, 25 000 Frw on school, 15 000 Frw on transport, 10 000 Frw on water and electricity and 15 000 Frw on other things.
Spending = 60 000 + 25 000 + 15 000 + 10 000 + 15 000 = 125 000 Frw.
Savings each month = 150 000 − 125 000 = 25 000 Frw.
Savings in a year = 25 000 × 12 = 300 000 Frw.

Saving for a goal. Niyonzima's football: 12 000 ÷ 500 = 24 weekends.

Where to keep savings

Where	Good points	Weak points
A tin or piggy bank at home	Easy to reach	No interest; can be lost, stolen or spent too easily
A savings group (ikimina)	Members save together every week or month and help each other; some lend to members	Needs trust and good records
An Umurenge SACCO	Safe; pays interest; gives loans to members; found in every sector	You must open an account
A bank	Safe; pays interest on savings accounts	May charge fees
Ejo Heza	A national long-term savings scheme to prepare for old age	The money is kept for the long term

Money can also be invested, for example in livestock, land or a small business. Investments can grow a lot, but they can also lose value, so they carry more risk than a savings account.

Money from other countries

If a relative abroad sends you money, it must be changed into Rwandan francs at the exchange rate. The rate changes every day. If 1 US dollar (USD) = 1 400 Frw, then 50 USD = 50 × 1 400 = 70 000 Frw.

Tip

Pay yourself first. As soon as you receive money, put your savings aside. Then spend what is left, not the other way round.

✦

Try it yourself

Umutoni saves 2 000 Frw a month for a year. How much does she save?
A family earns 80 000 Frw a month and spends 65 000 Frw. How much can it save each month?
A bicycle costs 18 000 Frw. How many weeks will it take to save for it at 1 500 Frw a week?
Which of these pays interest: a tin at home or a SACCO savings account?
Change 30 USD into Frw if 1 USD = 1 400 Frw.

Answers

2 000 × 12 = 24 000 Frw.
80 000 − 65 000 = 15 000 Frw.
18 000 ÷ 1 500 = 12 weeks.
The SACCO savings account.
30 × 1 400 = 42 000 Frw.

Quick check

Ganza keeps all his savings in a tin at home. What is one weak point of this?

What you learned today

A budget shows what you earn, what you spend and what you can save.
SACCOs and banks keep savings safe and pay interest; a tin at home does not.
Save a fixed amount regularly to reach a goal.

Sources and credits

Mathematics Grade 8, 1.7 Working with money: Budgets, savings, discount, interest and exchange rates, by Siyavula and volunteers, provided by Siyavula, licensed under CC BY 3.0. Adapted by Ganzaa.
The section on Rwandan ways of saving (ikimina, Umurenge SACCO, banks, Ejo Heza). Written by Ganzaa.

1Why people save

2A budget comes first

3Where to keep savings

4Money from other countries

Try it yourself

Why people save

A budget comes first

Where to keep savings

Money from other countries