Hello dear friends. We are alive and well today by God's grace so let us give Him our thanks. Today, I shall be writing about something I learned from my mother.

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Standing Orders and Their Importance

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What are standing orders?

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A standing order can be seen as a a fixed arrangement you have with a bank, where the bank makes certain fixed payments on your behalf for a certain period of time.

When this time elapses, you have three options.

• You can renew the standing order: That is, the arrangement is the same but what changes is that you extend the time period again further.
• You can modify the standing order: That is, you can change some aspects of the arrangement such as the fixed amount and then extend the time period.
• You can allow it to expire: That is, when it expires, you do nothing.

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Importance of Standing Orders

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Standing orders are very useful to us. They help us to make certain payments on time and prevents us from being fined. They also allow us to save money easily. Let me go into details.

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Payment of loans

One very important payment that can be best done through standing orders is the payment of loans. A very important aspect of taking a loan is the ability to pay. When you create a standing order, taking and paying the loan is easier.

So let's say you have a current account with a bank and your monthly salary is 200,000 frs. In case you have a loan of 300,000 frs to pay in a micro financial institution such as a credit union, you can give a standing order to the bank to make fixed payments of 50,000 frs every month for six months.

Such that whenever you come to take your salary, you are collecting 150,000 frs and your loan is being paid without you interfering. This is good because whatever comes up, you will budget just the 150,000 frs. Thus, your loan is paid on time and you don't default the payment.

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Saving

This one is also very important. What many people don't know is that standing orders are a very efficient way of saving money. Suppose you wish to save 10,000 frs a month. When you collect your salary, you can fully intend to save that money but an emergency can arrive that forces you to use that money and at the end of the month, you haven't saved anything.

So you can simply give a standing order to the bank to transfer a fixed amount such as 5000 frs, 10,000 frs or 20,000 frs etc to your saving account every month. Such that what you will collect as your salary will be minus that amount. You can now easily draw your budget with the saving already being taken care of for you.

Now, the little advice want to give to youths is that as soon as you start receiving your salary, create at least one standing order to your savings account. When done this early, you start saving at a young age when the needs are not really heavy and this can help you a lot in future when you start having other responsibilities.

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I hope we have learned what standing orders are and how important they are. If you have any questions, feel free to ask in the comment section.

Thank you for reading.
By
@rosita-nkefor