How to automate your savings in Kenya

In Kenya, where economic challenges and rising costs of living can make saving difficult, automating your savings can be an effective strategy to ensure financial security. By setting up automated systems to consistently save a portion of your income, you can grow your financial stability without the pressure of manually setting aside money each month. Automated savings remove the need for constant decision-making, helping you maintain consistent progress toward financial goals, whether it’s building an emergency fund, planning for a major purchase, or investing in future projects.
Open a Dedicated Savings Account
Setting up a separate account for savings is the first step to successful automation. A dedicated savings account makes it easier to separate savings from your regular spending money, reducing the temptation to withdraw funds for unplanned expenses.
Some Kenyan banks, like Cooperative Bank’s M-Coop Cash or NCBA’s Loop Account, offer high-interest savings accounts that help your money grow over time.
If you prefer to “lock” your savings for a certain period, consider accounts that require a notice period for withdrawals, which can help you avoid impulsive spending.
Set Up Automatic Transfers from Your Salary Account
One of the easiest ways to automate your savings is by setting up automatic transfers from your salary account to your savings account. Most banks in Kenya offer standing orders, which allow you to specify an amount to be transferred from your main account to your savings account on a specific date each month.
Banks like Equity, KCB, and ABSA offer standing orders, which can be set up at a branch or online through mobile apps.
Schedule the transfer for the day your salary is credited, ensuring you save first before spending. Many Kenyans find this approach especially helpful as it ensures that savings are a priority.
Leverage Mobile Banking and Mobile Money Platforms
Kenya is globally recognized for its innovative mobile money ecosystem, with platforms like M-Pesa playing a huge role in everyday financial transactions. Using these tools can help make savings automation easy and accessible.
Safaricom’s M-Pesa platform, in collaboration with banks like KCB and NCBA, offers the M-Shwari and KCB M-Pesa accounts, where users can set up automatic deposits to their savings accounts.
Through the app, you can choose to transfer a set amount each week or month from your M-Pesa balance to your savings, making it a hassle-free option for automating savings.
This feature allows you to lock your savings for up to 12 months, and you can set automated deposits from your M-Pesa account to accumulate funds gradually.
Utilize Bank and Fintech Apps for Personalized Automation
Many Kenyan banks and fintech companies offer apps with advanced savings automation options, allowing you to control the frequency, amount, and purpose of your savings. These apps provide features tailored to different savings goals, including emergency funds, education, or holiday funds.
With NCBA Loop, you can set savings goals and automate contributions to your account. The app also provides insights and tips to help you manage spending, making it a holistic financial tool.
This app allows you to set up automated transfers between accounts and create specific savings targets.
Fintech platforms like Abacus and Craft Silicon’s “EazzyBanking” by Equity provide savings automation options where users can allocate funds for different purposes and set regular contributions.
Invest in Sacco Shares and Lock-in Savings Plans
Saccos (Savings and Credit Cooperative Organizations) are highly popular in Kenya, offering a way for members to save, invest, and even access loans. Saccos provide automated savings plans where a fixed amount is deducted from your income and invested in Sacco shares or savings accounts.
Many employers in Kenya facilitate Sacco contributions directly from payroll. Check with your employer if they support automated Sacco contributions and start small if you’re new to Saccos.
Sacco members have the option to lock their savings, providing security against impulsive withdrawals and the opportunity to earn dividends on shares.
Utilize Digital Savings Platforms and Apps
As fintech expands in Kenya, digital savings apps have become a convenient way to automate and manage savings. These platforms offer user-friendly interfaces that make it easy to track progress, set goals, and make automatic contributions.
Local apps like Akiba and global tools like MoneyBox offer a way to save a fixed amount regularly, allowing users to “round up” transactions and save the extra cash. These platforms can be set up to withdraw funds on specific days.
Some apps offer a “round-up” feature, saving small amounts every time you make a purchase. This can be an effective and painless way to save without even noticing it.
Automate Savings through Investment Accounts
Besides saving cash, consider investment accounts to build wealth over time. Investments typically offer higher returns than standard savings accounts, though they carry some risk.
Kenya offers several mutual funds, such as those provided by Britam or CIC, where you can set up recurring investments. You can arrange automatic transfers from your bank account to contribute to these funds regularly.
Automating small regular purchases of stocks or bonds is possible through brokers like Faida Investment Bank or Standard Investment Bank. This method allows for compounding growth and potential dividends over time.
Budget Using the 50/30/20 Rule to Allocate Savings Automatically
Adopting a budgeting framework can guide automated saving practices. The 50/30/20 rule is a popular model where 50% of income goes to needs, 30% to wants, and 20% to savings or debt repayment.Set up automated transfers so that as soon as income is received, 20% goes into a savings or investment account.
Many banking apps allow you to set automated transfers as a percentage of your account balance, which can simplify saving, especially if your income varies from month to month.
Review and Adjust Automated Savings Regularly
Automating savings is only effective when reviewed regularly. Changes in financial status, such as salary adjustments, additional expenses, or new goals, may require adjustments to your automated contributions.
Review your savings every three months to ensure you are on track with your financial goals.
Once you reach a target, such as a completed emergency fund, shift automated contributions towards new goals, like retirement or education funds.