I Saved Ksh300K to Buy My 1st Car, But Changed My Mind at the Last Minute

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.

If you are about to give up on your savings journey, listen to my story

Early this year, I was getting ready for 2023. As an organised Kenyan, my first step was to file taxes and make new year resolutions. 

I felt that my biggest financial goal in 2023 would be to save Ksh300k as a downpayment for my first car, a locally used Nissan Note costing Ksh800,000. 

I wanted to buy a car to improve my productivity at work. I work as a real estate saleswoman and moving around to meet clients can be challenging when I have to catch matatus frequently. Sometimes moving across the outskirts of Nairobi - Ruai, Kamangu in Kikuyu, Mua Hills in Machakos, and Kibiku on the road that connects Ngong to Suswa. 

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Once I had a goal, the next step was to figure out my road map. My net salary is about Ksh87,000 of net salary. I read about common budget rules and settled on the 50:30:20 with a personal adjustment which I will call the Cate Special. 

Typically, the 50:30: 20 rule requires you to split your net salary into 3 categories, 50 percent goes to basic needs like rent, medical expenses, etc, 30% goes to wants and secondary expenses such as travel, entertainment, subscriptions, etc. The other 20% goes to savings. 

For me, I interchanged the rule to have 30% go to savings and 20% go to wants and secondary expenses. 

The 30% translated to Ksh30k per month. Since 2021, I have been running an Airbnb in Nairobi. Earlier this year, before Airbnbs mushroomed in Nairobi, I was making Ksh20,000 on a good month. 

I decided that in order to fast-track my dream of being a car owner, I would put all the business profit into the savings kitty. 

To ensure financial discipline, I opted to have the savings kept in a dedicated savings account.

Things went well until April when my Airbnb apartment suffered a burglary incident. I lost valuable electronics that nearly crashed my spirit. For a moment, I contemplated closing the business, but since it was doing so well, I decided to give it another try. 

This meant dipping into my savings kitty to rescue the business. I went to the bank and withdrew about Ksh100,000 out of the Ksh150,000 I had saved until then. 

However, I was surprised to learn that the emergency withdrawal meant I would not be getting any interest for the close to four months I had operated the savings account. 

The loss of interest, and the disruption in my side hustle, saw me skip saving in April and May. However, in June, my Airbnb was back to profitability and my motivation to save came back. 

However, this time round, I was determined that I would not find open a savings account with a random bank account. I needed to be intentional and only get a banking partner who would increase my motivation and help me fast0-track my goal. 

After weeks of researching, I came across the Absa Digital Savings Ac which picked my interest because: 

• It has a 10% interest rate - one of the highest among commercial banks in Kenya
• It has daily accrual and monthly compounding
• It is fully digital, making it easy for me to track my goal through my smartphone and not having to queue at the bank
• In the event of an emergency, it allows me to withdraw their savings without any fines or penalties

This is how I moved the Ksh50,000 that was remaining in my savings account to the Absa Digital Savings Account. I also resumed my Ksh30,000 standing order which is automatically deducted from my salary and deposited into the Absa Digital Savings Account. 

Five months later in October, I had already saved more than Ksh300,000. However, motivated by the discipline I had developed and the interest I was earning, I instead opted to wait a little longer to allow me to buy my first car in cash. 

By my calculations, I will have earned over Ksh40,000 in interest, by the time I achieve this goal. I might use it to take a comprehensive insurance cover, or get a few full tanks. Wish me luck!

Also Read: How to Open Absa Digital Savings Account: A Step by Step Guide