How to Save Money with a Low Income in Kenya

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How to Save Money with a Low Income in Kenya


“Do Not Save What Is Left After Spending; Instead Spend What Is Left After Saving.”  - Warren Buffet

Saving is no doubt an important tenet of wealth building. Everyone needs to save no matter their income level. And dare I add that it is not an easy habit. Some people dismiss this step by insisting that saving is a preserve of the rich folk. A classic case of which came first, the chicken or egg, narrative. To become rich, you first save and invest. It follows then that to continue being rich you need to continue to save and invest. So you must start somewhere.

Why You Need To Save At Any Income Level.

  • It gives you peace of mind in case of an emergency.

There is nothing that gives you peace and confidence on money matters as the comfort in knowing you have a rainy-day fund, no matter how small. Emergencies don’t give any notice for you to prepare, they just happen, and they are urgent at the time. So, when you have a pot of your savings put aside, it really does help your mindset to tackle the emergency.

  • Small amounts saved well and earning a good return will lift the standard of living of the saver.

The beauty of saving is in putting an amount aside, over a period of time for investing. You are not required to put huge chunks of money into saving unless you can afford it. What is key is you remain consistent with what you choose to save. I cannot overemphasize the power of compound interest.

  • Gives you discipline in how you spend your money because every shilling matters.

To be a good saver you need to cover your bases as far as your needs are concerned. You need to know where all your income goes. This will make you more intentional with your finances because you have goals to reach.

How Can You Become A Saver Despite Having A Low Income?

There are some techniques you can use to start and grow your savings

1. Start With A Budget To Understand Your Income And Expenses

There is nothing like a good old budget to help you put your finances into perspective. A budget forces you to have a grasp on what you do with your money. It will also help you to identify possible ways to cut down on your expenses so that you can squeeze out the extra shilling for investing.

2. Automate Your Savings

As much as possible, automate what goes into your saving account. Consider having a standing order or if your employer can assist with check-off please take this route.  Eliminate the need to use your own willpower to move money between accounts, because the devil is in the details, literally and figuratively. When you have no control over this element of saving, then you do not need to commit it to memory. The less intervention on your part the better your results will be especially if self-discipline is a challenge.

3. Save Through Mobile Wallets.

This requires a lot of self-discipline but it also allows you to save small amounts of money without necessarily incurring extra banking costs. Some even offer some interest, though they are negligible compared to the interest rates offered by other financial services providers.  I will say use the mobile wallets to allow you to save any small amount you come across because it does add up.

4. Join A Merry-Go-Round Chama.

A merry-go-round is an investment group in which members collect money from each member of the group, periodically for example, Monthly or Weekly and the collected amount is given to one member. The process is continued until each member receives their share of the lumpsum. If you look at it logically this is a way to save, where you receive what you put but, in a lump sum form. The beauty of this is once you receive the amount you can then bank it or put it in a money market fund such as ICEA Money Market fund. My hairdresser has done very well with merry -go -chamas. In fact, I believe she is in several and she could not be happier, because of the discipline it forces her to have. When chama seating is every Thursday, then you have no choice but to show up for the meeting with your contribution. You do need to be careful who joins your chama so that you do not contribute and then when it is your turn to receive the money, members default.

5. Join A Food Chama.

In this chama, members contribute monthly, and the pooled funds are then used to buy non-perishable foodstuffs as well as other monthly household shopping. The advantage of pooling the money together is that the members buy the foodstuff at wholesale prices. It leads to some savings on the discounts enjoyed.

As an emphasis, these kinds of groups run on trust and work well when the members know each other well.

6. Investment Savings And Investments Cooperative Societies (SACCOs)

The Investment SACCOs can be used as investment channels where members are facilitated to acquire assets.  It could be land, transport vehicles, and motorbikes.

In the recent past in the media, a Sacco for bikers was featured in the news where they managed to secure the purchase of land through the SACCO for its members and the Sacco was in the process of financing the construction of their homes.

I was both encouraged at what we can achieve no matter our life circumstances and challenged because now I did not have an excuse to give for my financial failures.

7. Consider Sharing Rental Space

If you are young and starting, then you have the freedom and luxury to minimize your expenses and maximize your savings and investments. If you live in the city then sharing a house and rent can make a big difference.

Of course, you have to get along well with your roommates and this is usually the biggest challenge. If you can make a go of it, then I encourage you to go for it, by all means.

8. Check Your Phone And Data Service

Some of the services and tariffs we subscribe to may not be useful. Unless you are in advertising why would you purchase a ringtone? Check if your data plan is the most efficient. Do you need to switch mobile service providers? In this day and age where we spend a lot of time on the internet, it is only proper to get your money’s worth

9. Consider Saving On Your Transport Costs.

One of the tragedies of keeping up with the Jones’ is that as soon as we get some income either when we are first employed or our businesses are starting to make a profit, we want to get a car so that we are differentiated from those “struggling” for public transport. A car is considered a status symbol.

On your way up to intentional wealth creation, you will learn fast to dissociate from “the shiny object syndrome.” If you bought a car to drive you to work, and then you park it the whole day, to drive it in the evening it is not serving your purposes. Unless of course, your other income streams allow you to purchase the car. Live life on your own terms and the external pressures to conform will fall off.

10. Buy Groceries From The Market, Avoid The Local Kiosk

 I don’t know if it’s only me who feels the pinch of buying groceries at the local estate grocer’s shop whenever I ran out of an ingredient. It is because I will usually get it at 3x or 4x its normal price. I have decided to be very meticulous with my grocery purchases and how I store them to ensure they last long and until I am scheduled to go to the market.

11. Learn To Do- It- Yourself

Youtube is abundant with  do-it -yourself videos. The end products are cheaper and last you longer than if you buy branded items. Some of the good ones include making your own soap and shampoo, yogurts, and baking your bread.

12. Repurpose Used Items

Learn to fix patches if the item of clothing is still ok. Curtains that are slightly torn could be converted to seat covers, older towels can make good floor cleaning material. Just think outside the box and you will be amazed at what you can do. As a bonus recycling is good for our planet.

Saving when you consider yourself a low-income earner is not easy, but if you are determined enough and creative, you will manage just fine. As always, I am rooting for you!

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