If I knew seven years ago what I know now about the importance of developing a saving habit, I would have grabbed the opportunity with both hands and set about planning my very own little nest egg for eventualities; I’d have hit the ground running!
Young people are generally not thinking about setting aside a ‘little something’ for a rainy day. It’s usually always spending spending spending and sometimes, investing in a business (which is great by the way). But they never think about cultivating the habit of saving.
By virtue of my job as a Pension Fund Administrator, I have seen firsthand the benefits of the scheme. There is a package called the Voluntary Contribution which allows individuals contribute to their pension account and be allowed to access this balance before retirement. This is totally different from the statutory contributions where an employee contributes towards his pension alongside his employer- savings which cannot be accessed before age 50.
What I do now, is save an extra alongside my statutory contributions because I want to increase my available balance many years down the line when I am eligible to access my account. It does not however mean that I cannot have access to all or some of the funds I voluntarily contribute.
If I’d known earlier, this is what I would have done;
- Opened an RSA account during my NYSC service year
- Started setting aside N2,000 of my ‘allowee’ every month as voluntary savings into that RSA account
- Increased voluntary contributions to N5,000 as soon as I secured employment in addition to whatever my employer was remitting on my behalf
- Further increased my voluntary contributions as soon as I received my first promotion and my take home was reviewed upwards.
Are you wondering what this would have done for me, maybe? I’ll tell you right away. It would have increased my RSA dramatically in such a short time, thanks to the power of compounding value!!! Fast forward seven years later; all of my contributions that I have in my RSA account which started way back at NYSC and which has been in my account for five years, I can access tax free!!! What a whooper! And at an interest rate of no less than 10%. Such funds will come in handy to pay for a 3day stint at the LBS or some other self-developmental skill acquisition or even to settle house rent for that matter!!
If only I had known I would have taken advantage of the opportunity to start early and gained an even higher balance by year 5. Because I know now what benefits there are, I cannot help but share with numerous young people out there. When my then Head of Sales & Marketing encouraged me to start the voluntary contributions way back in ‘06, my answer to her was; “ah ma, with this my small corper salary?” Today, I honestly wish I had listened to her. I started 4 years too late!!
Why don’t you take a leaf from my experience and give it a try? I’ll let you know how to get started; after all, it is what I do!
By Adaora Ude adaoraude@gmail.com
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This article was first published on 25th June 2013 and updated on July 7th, 2013 at 8:22 pm
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If I knew seven years ago what I know now about the importance of developing a saving habit, I would have grabbed the opportunity with both hands and set about planning my very own little nest egg for eventualities; I’d have hit the ground running!
Young people are generally not thinking about setting aside a ‘little something’ for a rainy day. It’s usually always spending spending spending and sometimes, investing in a business (which is great by the way). But they never think about cultivating the habit of saving.
By virtue of my job as a Pension Fund Administrator, I have seen firsthand the benefits of the scheme. There is a package called the Voluntary Contribution which allows individuals contribute to their pension account and be allowed to access this balance before retirement. This is totally different from the statutory contributions where an employee contributes towards his pension alongside his employer- savings which cannot be accessed before age 50.
What I do now, is save an extra alongside my statutory contributions because I want to increase my available balance many years down the line when I am eligible to access my account. It does not however mean that I cannot have access to all or some of the funds I voluntarily contribute.
If I’d known earlier, this is what I would have done;
