In Summary
  • Three out of a group of five youth that we interviewed claimed that Kenya’s economy was too steep to be able to meet their daily needs and save simultaneously.
  • While it is not practical to assume that a young person can have millions to invest in real estate, there are ventures they can opt for that will work within their budget.
  • Someone living with their parents and have no costs such as rent and food, and provision for a family has no reason not to save up to 100% of what they earn.

The saving culture among Kenyan youth seems to be deteriorating at an alarming rate. Most youth admit to not being able to save money, attributing this to the high cost of living in the country.

According to young people that we spoke to, saving to invest in real estate and eventually have a home in future seems to be an impossible phenomenon.

Three out of a group of five youth that we interviewed claimed that Kenya’s economy was too steep to be able to meet their daily needs and save simultaneously. When asked about their future plans, most said that they would cross the bridge when they get there, hinting at the possibility of taking a loan to help them get a home and settle down.

Mr Fred Kadidi, a local shopkeeper in Kasarani area, says that he makes enough money to meet his needs. When questioned about whether or not he puts some aside, this is what he had to say:

“I am a bachelor and because of that, I cannot say that my expenses are very high. Once I pay my rent and do my house shopping, the bulk of my expenses are covered. I am left with enough money to indulge in a few comforts. With the money remaining, I put it aside to buy things that I have my eyes on.”

When it comes to investing in his future home however, Mr Kadidi admits that he has not started saving for that yet.

“I have thought of where I would like to live and the home I want to buy but I cannot say I have started saving towards that goal. Buying a home is usually at the back of my mind but I have not actively started saving towards that goal,” says Mr Kadidi.

Mr Fred Kadidi is a local shopkeeper in Kasarani area.

Mr Fred Kadidi is a local shopkeeper in Kasarani area. PHOTO| COURTESY

The Global Financial Inclusion Database (Findex) released by the World Bank in 2014 shows that the youth are 33 per cent less likely to own a savings account, compared to adults.

This means that the percentage of youth practicing a saving is considerably low. However, Mr Brian Rono, a personal financial adviser at Cytonn Investments, opines that it is possible for young people to save money.

“I do not believe that taking loans is the answer to everything. It is possible to save towards buying a piece of land to construct your home in or even buying a completed home without committing your-self to a steep loan that will take years to offset. The mentality that one cannot achieve this without a loan should be changed.”

Mr Rono emphasises that for someone to save, they need to have a goal of something they want to achieve. This could be the possibility of achieving a certain amount of money in a certain period of time.

“Most young people do not have a clear saving goal. This leads to lack of motivation among them to begin the process of saving. It is impossible to save money for which you have no purpose for. If you are saving towards buying a house for example, you can research on the approximate costs so that you have the amount you want to achieve.”

He adds that the saving goals could be short term or long term. In this case, saving for a home will fall into the long term category. Once a goal has been set, here are some of the tips he offers on how to wisely save money:

Joining a Sacco

Mr Rono suggests that joining a Sacco (Savings and Credit Cooperative Organisation) works more in one’s favour when saving money.

“When compared to banks, Saccos have better returns on savings. This means that the money deposited in the Sacco will have a higher interest growth rate as compared to money deposited in a bank,” notes the financial adviser.

He adds that chances of a Sacco making a loss are minimal compared to the banks. “We have been witness to banks closing down after being declared insolvent, or cases of grand theft which leave people concerned on the safety of their money. With Saccos, such stories are rare, meaning that the members’ money remains intact,” says Mr Rono.

The good thing with a Sacco, he says, is that in case of an emergency, it can offer you up to three or four times of the deposit you have saved with them as a loan to help you deal with the pressing need.

Joining a savings group (Chama)

“It is possible to get a group of people you trust who will hold you accountable for saving a certain amount of money every month. This is usually the case with Chamas,” advises Mr Rono.

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