Mobile-based tools tipped to build a saving

One of the things that can really kill the mood of a special occasion like a birthday or a holiday is the lack of enough resources to shop for gifts or other items that may be needed to make the event memorable.

Unfortunately, over the last five years, the high cost of living has been presenting a real challenge for Kenyan households, many of which are struggling to make ends meet.

This has eroded the country’s saving culture, falling behind regional peers like Tanzania, Rwanda, and Uganda, whose average saving rate is above 20 per cent. Kenya’s average saving rate is between 10-14 per cent.

As the festive season approaches, saving beforehand can be an excellent strategy for households to manage the high cost of living in an environment where disposable incomes are shrinking. 

Financial experts say that early planning can help households to avoid financial stress and prevent debt accumulation, with the latest data by Financial Sector Deepening Kenya (FSD) showing that debt accounts for 52 per cent of household revenue in Kenya.

According to Samuel Njuguna, the founder of Chumz app, one of the most effective ways to save for a special occasion, such as the Christmas holidays, amongst other occasions, is to automate savings.

"One can automate their savings by putting them in mobile-based savings applications, designed to help users save money through goal-based and behavioral nudges," says Njuguna.

Applications such as the Chumz app, licensed in 2022 by the Capital Markets Authority, allow users to start saving with as little as five shillings.

The platform allows users to create a specific goal in the app, for instance, "Christmas 2025," and set a target amount and redemption date.

“The app utilises behavioral psychology, gamification and customizable tools to help you track and save gradually toward your target,” said Njuguna.

Users can link their M-Pesa and set up automated savings triggers like saving a small amount daily or weekly, saving a percentage every time they receive money in M-Pesa, as well as rounding up transactions and saving the spare change.

It sends its users nudges and reminders when they spend money, encouraging them to save instead of spending impulsively. This can be especially useful during the December shopping rush.

“Users can also lock the Christmas goal so that they don’t withdraw the money until December, preventing premature spending,” said Njuguna.

After spending heavily over the Christmas holidays, one of the issues that many families struggle with is paying for school fees during the January back-to-school season.

Just like for Christmas, the Chumz app allows users to create a goal for January school fees, for example, “Term 1 Fees – 2026” with a set amount and deadline.

Saving a small amount weekly or biweekly reduces the pressure when the term starts. For example, if you save Sh500 every Friday for three months, that comes to a total of more than Sh6,000, plus interest.

“We partner with regulated financial institutions, so your savings will earn some interest while they sit in your wallet,” stated Njuguna.