We talk a lot about saving here and its importance in an excellent financial plan. Today we would like to discuss tools for saving money and where you can save your money. We will examine the pros and cons of each method available to Zimbabweans to save money. This discussion is vital because we can never change our finances without a mechanism to preserve the money we make.
NMB, of course, stands for National Mattress Bank. This is a term for all methods that involve keeping the money in cash in your residence. So whether it is in your mattress, a safe, a Gaba (can) or any other home-based saving mechanism it’s all NMB. This is usually done in US dollars or other foreign currency. The lessons of the recent past are not soon forgotten. People feel safer with the money in their hands even though security considerations are involved.
Mukando or Round behaves like a savings club if the members choose. It is similar to NMB with the advantages of spreading the risk and keeping the money in motion. The latter suits those who may not have the discipline to sit on the money. The advantage over the NMB here is it lacks security considerations but also introduces the problem of relying on other people. A chain is only as strong as its weakest link, and nowhere is this more evident than in Mikando. Many horror stories have come out of money/saving clubs.
Mobile money wallet
Mobile money wallets also offer an opportunity to save money, especially with the forex mobile money wallet. This introduces better security than the 2 methods mentioned before, as long as you do your part. Mobile money wallets also enjoy coverage by the Deposit Protection Corporation of Zimbabwe since 2018. This means the money in your mobile money wallet is insured up to a certain amount should the provider collapse or fail. The disadvantage here is the money is a little bit easier to spend and also prone to sudden law changes.
The good old bank account, unfortunately, reminds people of the trauma of money losing value almost overnight. However, bank accounts are still viable savings mechanisms. You have the option of saving in Zimbabwean dollars or foreign currency. The Zimbabwean dollar is currently doing a better job than before of preserving value, but recent history has reminded us that when a decline comes, it comes hard and fast. Banks accounts enjoy deposit protection as well, should anything go wrong. However, bank accounts may not be ideal for those who lack discipline because it’s pretty easy to spend money.
Term deposit accounts
The term or fixed deposit account is a step up from the bank account. These accounts allow you to deposit money for a predetermined time period. Available in both Zimbabwean dollars and foreign currency from most banks, we have already discussed why the foreign currency is favourable. Those who lack discipline, they take away the ability to spend money. Some will allow early withdrawal but with penalties as a deterrent. You will also receive interest on your money, which tends to be higher than on ordinary bank accounts. Consider this a little bonus for your saving. The big downside with these accounts is they usually require a lump sum upfront with some banks starting from US$1000. You can also enquire with banks for what are known as Call accounts. These usually allow you to deposit money, but when you withdraw, you must give notice, sometimes as long as 31 days, to access your money.
For saving your money, these are the best methods available in Zimbabwe. Remember, the object here is to save your money, so we are not looking at methods that involve risk, even if they allow your money to grow.