My Friends Saved a Combined Ksh1 Million in 2023, But I Failed Our Savings Challenge

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.

Last year's family gathering was special. For the first time, we talked about money and how we made, spent, and saved money. 

The conversation started when I relayed the news that, in October 2022, I had started a new role at work. Mark you, I am among the younger cousins in the family. The senior cousins began chipping in with their advice on how I should set myself up financially. Ultimately, the dominant advice was to get a piece of land. 

Some shared their personal experiences buying small pieces of land which later appreciated to mind-blowing value. As I was winding down the year, I thought about the idea and decided that in 2023, having a title deed in my name would be my biggest priority. 

I met with my “boys’ club” in January where we shared our dreams for the New Year. Everyone had a new drive to do something this year. Alex wanted to buy a car for his delivery business. Sean wanted to get married, so he needed to save for dowry and wedding expenses; while Katana wanted to leave employment and start his own business. For me, I wanted to buy land. 

Diderot Effect

Promptly, we set a target of saving Ksh350,000 each by the end of the year. For us, this was a realistic goal. We wanted to set a SMART goal.

The agreement was that we would check in every three months and monitor progress.

The first review in March went on without a hiccup. However, soon after, the Diderot effect kicked in.

What is the Diderot effect, you ask? Well, Denis Diderot was a French philosopher who lived in the 1700s. He was a well-known man since he co-founded and wrote Encyclopedie, one of the most famous encyclopedias of the time. 

Unfortunately, his fame was not commensurate with his wealth. He was poor. Therefore, when his daughter was about to marry, he could not raise the necessary dowry. Luckily, Queen Catherine the Great, the Empress of Russia, was a big fan of his work, and when she heard of his woes, she offered to buy his entire library. 

This enabled Diderot to afford to pay the dowry, and he was left with a lot more. As a man of means now, Diderot thought he could buy a new scarlet robe for himself. 

However, he soon realized that the scarlet robe did not fit in the surroundings of where he lived. He then changed his rug to a new Damascus rug, redecorated his kitchen, switched up his furniture, and on and on, he spiraled. 

Mid-Year Wake Up Call

I changed my Sofaset since it was an old set that I got when I first got employed. This was according to plan because I had saved separately for the purchase. However, as soon as the sofa set was in the house, everything else seemed out of place. I wanted a new carpet and curtains; the coffee table was not complimenting the new sofa, and on and on. 

Like Diderot, I went on a spiral. Every time, I convinced myself I would buy this item and then get on with my “ka-plot” savings journey. 

When June came about, I got hit by that mid-year wake-up call. It was time to decide: do I just forego my goals and cruise through the last half of the year, or do I salvage things and get myself together?

I chose the latter. I understood I could not do things the same way I was doing them the first half of the year. I am a frugal person, and I look for value in everything I purchase. However, that home makeover broke my discipline.

Therefore, I knew the solution I needed was one that would reduce the friction between me and saving. Thus, I started researching what solutions existed for my specific scenario.

Retracing My Steps

I realised that one of the factors that had led me off my savings journey was not having a dedicated account to keep my savings. I had only one bank account where I kept my savings and distributed them based on my off-head calculation. 

This lack of demarcation between expenses and savings often convinced me to dip into my savings and compensate at the end of the next month, which I would postpone and eventually, I started becoming demoralised. 

With my long working hours, I found myself postponing a visit to the bank where I planned on opening a second bank account. One evening, I decided to google some of the available online savings products. 

That is how I came across the Absa Digital Savings account. It was the word “digital” that initially drew my curiosity. And it is indeed a digital bank account. You can open it from the comfort of your smartphone, which I did immediately after I read about how it works. I remember it was around 2:00 AM. It's one of those nights where sleep escapes you, and you just have to contemplate your life. 

I also resolved that in the morning, I would ask our HR manager to have part of my salary paid directly into the account. Come morning, and before I did anything for work, I ensured that my automatic payment into the savings account was set up. 

Since then, my savings towards purchasing a piece of land have been automatically deducted from my employer’s bank account into the Absa Digital Savings account.

Absa Digital Savings Account Features

What sold me on the account was the 9% per annum interest on the savings that is paid monthly. This is one of the highest interest paid on a savings account by a commercial bank in Kenya. 

(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.)

This excited me as it meant I was not only saving but also investing because my money would not lie dormant in a current account. It would be making money for me as I slept. 

This provision has since motivated me to move my emergency fund to the Absa Digital Savings Account, this is money that I keep for a rainy day such as a job loss - I never touch this money except for very dire situations. However, rather than have it dormant, I realised, I could grow it through the Absa Digital Savings Account. 

As if that is not enough, the liquidity that the Absa Digital Savings account offers is unmatched for an account offering such a rate of return. In case of an emergency, I can access the funds without fees or penalties. 

A Look into the Future

Having the Absa Digital Savings Account was like hitting three birds with one stone. I got to automate my savings, which earned significant interest, and in case of an emergency, the savings coils serve as my emergency fund.

Admittedly, my friends are much further along in the savings journey we had committed to. I have since made up with them, and now they follow up to keep me on my toes. But now, I don’t disappoint them since everything is automated.

The last part of the year has made me very proud of myself. I have built back my spending discipline and I am very intentional about my purchases. With the way things are going, I am looking forward to catching up with my friends early in the year because I plan to have my annual bonus go towards this goal. 

Also Read: Absa’s Digital Savings Account Now Paying 10% Interest