With a Ksh90K Salary, I Saved My 1st Ksh300k After 2 Years, Why It Took Me So Long

‍EDITOR’S NOTE: This article is part of our Money254 Partner Series produced in partnership with Absa Bank Kenya to celebrate the launch of their new digital savings account. For more on Absa’s new digital savings account, read here.

What is the highest amount of money you have ever accumulated in savings? When this conversation came up in July 2022, I had a hard time remembering the highest amount of money I had held in savings - partly because I rarely thought about savings. 

I would make random investments - I have two bulls in the village, shares in a few local companies, a decently furnished house, and a few other possessions. However, I acquired these items over a long period of time, and never had a significant amount accumulate in savings. 

Nevertheless, I jogged my memory to determine the highest amount of “my own money” I had held in one go. I remembered that the biggest balance in my account was in December 2021 when I received a 50% bonus. Since we were paid on the 16th while I was yet to exhaust my November salary, I had about Ksh123,000. This was unimpressive for someone earning a gross monthly salary of Ksh90,000. Here is my story. 

Employed Fresh Out of Campus

I graduated with a bachelor’s degree in science in December 2019, three months after I landed my first job. I sat my final exams in July 2019. A day after starting my final exams, I got an email from a human resource officer at a food manufacturing company in Industrial Area, Nairobi. I had been shortlisted for a graduate trainee position. 

D-day came and I had mixed feelings about my chances. Some questions were really tricky and difficult to answer. However, after we left the conference room, everyone was complaining so I figured I might just be lucky. A week later, now that I had already cleared my exam, I got a call from the same lady. Good news!

Starting Salary

I started my job in August 2019, after signing a contract for a Ksh30,000 starting salary. With a take-home of about Ksh26,000, I was earning a fairly decent amount, considering my inexperience and my graduation was not until December. 

Actually, the majority of my classmates were working on free internships so I still count myself lucky. My needs at the time were minimal, paying Ksh7,500 as rent for the bedsitter that my parents had been paying since I was in my second year. I spent about Ksh5,000 on transport, and another Ksh5,000 on food and clothing. 

Upgrade Kidogo

The balance was used for a number of expenses including entertainment and paying for my student loan. Whatever remained in my salary account was what I treated as savings. 

Every three or so months, I would make a household purchase depending on how much I had saved. I replaced my 3*6 bed with a comfortable king size bed and bought a 49-inch TV, a four-burner cooker, and a comfortable sofa. 

In July 2020, I was due to get my first pay hike but it never happened (for obvious reasons)! I never complained because my pay had marginally increased after the government introduced some tax reliefs. 

Fast forward to January 2021 and I got my overdue pay increase. Double pay rise (Ksh60,000), pushing my net income to Ksh47,000. By this time, my bedsitter was feeling already too small. I was frequently having visitors including colleagues, friends and family and felt it was time to move. 

More Money, More Expenses

This is how I moved to Ruaka to a one-bedroom apartment where the monthly rent is Ksh15,000. My budget remained almost the same, although by this time my parents had retired and I was frequently sending them money for various needs. 

I would occasionally use my savings to invest in the village, now that I was frequenting home on weekends. I bought four goats, reared chicken, and bought two calves that are now grown bulls worth a decent amount. 

2021 proved to be quite a good year for me. In June, my immediate boss left the company for greener pastures. I made an internal application for the position, just as a long shot since I had just recently been promoted. To my surprise, I was shortlisted and eventually picked for the position, starting off in July. I was now an inch away from a six-figure salary - with a gross salary of Ksh90,000. 

I wouldn’t say I was exactly reckless with my money, but a year later, as I reflected on the conversation with my friends. I felt my financial situation was underwhelming. I reflected on my spending and saving habits. 

I did not have a budget, but most of my money went to rent, transport, remittances to my parents, and clearing my HELB loan. The balance was what I treated as savings although I would occasionally turn to the same savings in times of emergencies or when I needed to make unplanned expenses - a fundraiser here, a wedding committee there, vacations, etc. 

My Big Mistakes

After the General Election in August 2022, I went on leave and reflected on my future. I realised that some of my friends who were employed long after me, many of them earning less than I did, were having significant investments. 

My best friend from campus, who had been unemployed for over a year after our graduation, was in the process of completing payment for a Ksh400,000 plot he bought in Machakos. 

I started researching the best personal financial management habits. The consensus from both theory and testimonials from successful savers was that:

Savings Should be Prioritised: I learnt that savings should never be what I am left with after spending my money. Savings should be the number one priority after receiving my income. 

Separate Expenses and Savings: I realised that one of my greatest undoing was using my salary account as the savings account. From my experience, this creates a temptation to overspend and “steal” from what should be savings. It also made it difficult to account for and audit how much of my money was going to expenses and how well or poorly I was saving. 

Always have a budget: I had operated without a budget, only relying on how much I was earning to guide my expenses. Without a budget, I could not track my expenses - some of which were unnecessary. I was spending a significant amount of money eating out when I could easily have spared it by having a set budget for food and a separate one for entertainment. 

Finally, a Budget

When I resumed work, the first thing I did was to create a budget for my August salary, which came at the start of September. 

I had interacted with various budget rules including the 60/40 rule, the minimalist rule, the 50/30/20, and the 70/30 rule. Since I was starting, I decided to spread out my net income through the 70/30 budgeting rule. 

Under this rule, 30% of my net income, Ksh20,400, went directly to my savings. 

My basic needs including rent, transport, food - together with my wants (travel, entertainment, home internet, etc) had to amount to no more than Ksh47,000 - 70% of my take-home salary. 

The Temptation to Withdraw

I had opened a current account while on campus, for purposes of receiving HELB money. I decided to be depositing my savings there since I had opened a different one when I joined employment. The old account did not have an ATM card so I figured it would discourage my temptation to withdraw. It worked.

In December 2022, I was reflecting on my achievements and of course, the biggest achievement was starting the journey to a healthy savings habit. From the August, September, October, and November salaries, I had saved about Ksh80,000. 

The December salary came with a double bonus and I directed 2/3rds of it to savings (Ksh45,000) - while the balance (Ksh13,000) was used for the upcountry travel expenses during the festive season. I closed the year with a total of Ksh145,000 in savings - the highest amount I had seen in a bank account registered in my name! 

Facebook Post 

I penned down a motivational note and posted it in a Facebook group for Kenyan savers. I received a lot of encouragement but a few people pointed out that I was missing an opportunity by saving in a current account where my money was not growing when I could save with a savings account. 

One saver recommended the Absa Digital Savings Account which had just been launched. 

Its features at the time included:

• 7% annual interest rate
• Interest paid out and compounded every three months
• One withdrawal per quarter (3.5% interest rate in the event of multiple withdrawals)

It read like a checklist for everything I needed. That is how I moved my Ksh145,000 from the current account to the Absa Digital Savings Account. 

2023 Resolutions

Interestingly, I didn't even have to go to the branch - everything was online, and in less than ten minutes, my digital savings account was ready. 

As part of my 2023 resolutions, I decided to increase my savings from 30 to 40% of my net income. I figured I had learnt to cut down unnecessary spending and the extra money should go to savings. After all, one of the rules I had learnt in personal finance management was increasing my savings every year, I was learning fast. 

Since January, I have been depositing Ksh27,200 to my savings account. Since my savings are now earning money for me, I plan to increase the amount further if I’m lucky to bag a pay rise during my annual review in September. 

At the end of March when the first quarterly payout was made, I had over Ksh4,000 in interest and about Ksh230,000 in total savings. 

Absa Digital Savings Revamped

In May, while I was still making my monthly savings, I got even better news. The Absa Digital Savings Account was revamped. 

(Editor's Note: The Absa Digital Savings Account is offering a 10% interest rate between effective December 12, 2023 and valid until March 2024, you can use the Absa Digital Savings Calculator here.)

• The annual interest was then 9% - one of the highest among commercial banks in Kenya. 
• The interest accrues daily and is paid out and compounded every month. 
• I also get instant access to my funds in the event of an emergency, no fines or penalties. 

It happened that the development had come when I had just sold some of my goats for Ksh20,000. I put the entire amount in the Absa Digital Savings Account. 

As we speak, I often log in to the Absa mobile app and stare at my balance - well past Ksh300,000 and still growing. Every day is a happy day because it marks the highest amount of money I have saved in one go. 

I plan to continue this for a year and buy a plot of land in Juja - then I will restart another savings goal, hoping to build my own home before I turn 30. I am cruising nicely! 

Would you like to join me in saving with the Absa Digital Savings Account? You can start your journey here.