Every month, Anne knows exactly where her money will go without writing it down. As an informal worker in Nairobi, she separates her earnings with every pay into envelopes at home. One, she puts funds for food, another for rent, a third for chama and another for school fees. When an emergency comes up, she adjusts her allocations.

Just like Ann, millions of families in Kenya manage money this way. According to the Kenya National Bureau of Statistics, more than 80 per cent of the workforce earns income through informal arrangements, while FinAccess’s Household Survey shows that over 84 per cent of Kenyan adults use at least one financial service, formal or informal.

These numbers point to a population that is not financially careless. According to Yvonne, ABC Bank’s Customer Service representative, many Kenyans rely on Chamas, cash jars and mobile money wallets to meet their daily needs, manage school fees, and support extended households. Adding to this, research by Financial Sector Deepening Kenya indicates that nearly half of Kenyan adults participate in informal savings groups.

However, for many, the informal systems they have are for survival and short-term stability, not long-term growth and as responsibilities grow, informal methods face limits. According to Yvonne, cash stored at home is vulnerable to emergencies and impulse spending, while Chamas provide lump sums, they often lack protection, interest growth, or long-term planning horizons. In addition, mental budgets like what Anne does with her pay may work well until an emergency occurs.

“The role of financial institutions is to strengthen these informal habits, not undo them,” says Yvonne. Savings Accounts offer safety, separation and protection, unlike saving in a jar at home. In addition, having a planned savings and investment product supported by standing orders helps one have a structure to their savings and investments. And products like ABC Chama accounts can help informal groups move beyond traditional table banking to formal investments and savings, providing their members with long-term planning and growth. 

Moving forward, Yvonne advises that it is paramount for every to view banking as a financial partner, not a “rule-setter” because even though envelops help you plan, banking helps you have structure to your finances, which ultimately helps you grow.