Survey: Kenyans switching to cheaper lifestyles as financial strain worsens

A significant number of Kenyans are cutting costs on housing, education, and daily expenses as they grapple with a challenging economic climate.

Many have shifted to cheaper rental homes, enrolled their children in more affordable schools, and opted for budget-friendly brands to cope with financial strain, a new survey by Old Mutual has revealed.

The 2024 Old Mutual Financial Services Monitor survey indicates that 29 per cent of respondents moved to cheaper rented houses over the past year, while 35 per cent switched to lower-cost retail brands.

Additionally, 31 per cent opted for more affordable mobile phones or data plans, while 19 per cent downgraded their TV subscriptions or streaming services.

The study also found that 22 per cent of Kenyans had paused contributions to investments, while 19 per cent delayed major expenses due to financial constraints.

“Kenyans are managing their expenses mainly by moving to cheaper rented property and purchasing cheaper brands. Slightly more consumers are moving their children to less expensive schools, compared to the previous year,” reads the report.

The survey, which assessed money management habits over the past six months, found that many Kenyans have adopted stricter budgeting strategies, tracking household expenses more closely. Some respondents reported cutting back on luxuries, eating at home instead of dining out, and reducing weekend spending to save money.

According to the report, the financial strain has pushed many Kenyans to seek loans to sustain themselves, with borrowing primarily driven by business needs, daily expenses, and emergencies.

The survey reveals that 40 per cent of respondents took loans to purchase stock or equipment for their businesses, while 38 per cent borrowed to meet everyday expenses. Another 33 per cent took out loans to cover unexpected emergencies.

Among those who borrowed for emergency purposes, education and medical expenses were the most pressing concerns, with 42 per cent of respondents citing school or university fees and 41 per cent highlighting medical costs. Additionally, 29 per cent borrowed for household maintenance or repairs, while 23 per cent took out loans to pay for specific items or services.

The survey also found that 11 per cent of borrowers sought loans to clear existing debts, six per cent to lend money to others, and four per cent to fund special celebrations.

With fluctuations in the economy, the report indicates that many Kenyans are turning to informal borrowing channels. About 40 per cent of consumers rely on financial support from family and friends, while one in four borrows from chamas (savings groups). Others are dipping into their personal savings to stay afloat.

As businesses struggle and the cost of living remains high, more Kenyans are making tough financial decisions, adjusting their lifestyles, and seeking alternative ways to manage their finances.

The survey was conducted between August 11 and August 18, 2023. The study employed quota controls based on factors such as age, personal income, gender, and geographical location to ensure a balanced representation of respondents.

Data collection was carried out through face-to-face recruitment, with participants completing the survey independently on a tablet. Interviewers were available to assist where necessary.

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In analysing and reporting the findings, statistical significance was applied at a 95% confidence level.