Saving with little or no income

The unemployed are caught in a no income, no savings cycle. You can't save money if you are not earning, can you? Without savings, you have no capital to start a business. This is why telling the unemployed to get into business seems like a hollow piece of advice.

Most young people in Kenya have no property they can use to raise startup capital. Without property, it's impossible to get loans from financial institutions. This barrier is the reason the government started the Youth and Uwezo Funds.

It is not only the unemployed who have problems saving money. Data from the 2021 Economic Survey shows that only 16 per cent of Kenya's working-age population are employed in the formal sector. Everybody else is either working in the informal sector or self-employed. Informal sector jobs are generally low-paying and lack job security.

The formal sector consists of government, the private sector and international organisations, but the situation there is not so rosy. Official data released last December indicated that less than 80,000 Kenyans in the formal sector have salaries of more than Sh100,000 a month. 46 per cent of workers in the formal sector earn less than Sh30,000 a month.

Regardless of your employment status or level of income, everyone should save and invest. If you are unemployed and there's a casual labour opportunity that can get you Sh500 a day, what's wrong with doing that work? You could get Sh2,500 from five days of work and invest part of the money in a small-scale venture, such as raising chicken.

Casual labour is not glamorous, but what's glamorous about being broke? Make use of any opportunity available to you where you are. Legally, of course. Too many people think betting will get them out of poverty but that's unlikely to happen for most.

If you have the space, growing some of the food you consume is a great idea. Pr James Mutuku, based in Kitui town, grows some of his household's vegetables. "People often wonder why I bother with these vegetables, but these plants save me money," the pastor says. "Some days, I save Sh20 per day and it looks little, but that's money staying in my pocket instead of going to someone else."

Surprisingly, despite the basic financial knowledge we were taught in primary school, there's confusion between basic needs and wants. This is among the reasons why saving money is hard. Paying for a TV subscription is great if you can afford it, but there are free channels out there. Cooking at home is cheaper than eating out. Shopping locally is cheaper than driving to a distant market.

Keeping up appearances to match with peers can be expensive, too. You may wonder how your workmates afford the latest gadgets with their salaries. They may have additional incomes you don't know about.

Plan your spending by preparing a budget. This will help you set aside money for savings. The key principle behind a budget is to save on purpose, and not to save what's left.