COST OF LIVING AND SAVING CULTURE OF KENYANS POST COVID 19

Abstract

Purpose of the study: The primary objective of this research was to explore the relationship between expenditures and savings among Kenyan households, with a focus on identifying factors that shape and influence this relationship. Specifically, the study aims to track changes in consumer behavior following the COVID-19 pandemic, assess savings patterns across different demographic segments, evaluate levels of financial literacy, and examine the impact of government policies on mitigating the effects of the cost of living on savings.

Statement of the problem. The lingering effects of COVID-19 on global economies have introduced significant uncertainty into people's financial situations, directly impacting their ability to save. Kenya, like many other nations, has witnessed a notable rise in the cost of living, prompting the need to understand its implications on saving behaviors. The study addresses the pressing research problem of how the heightened cost of living, exacerbated by economic shocks, has diminished saving capacity.

Methodology: Utilizing a desktop research design, this study integrates quantitative economic data on inflation, savings rates, and expenditures with qualitative insights obtained from interviews and surveys. Data collection methods encompassed economic indicators sourced from official channels, structured surveys/questionnaires, as well as focus group discussions and interviews. Analysis of the data employed regression analysis to establish a model illustrating the impact of the cost of living on savings, supplemented by thematic analysis to interpret qualitative findings.

Findings: The findings of the study revealed that increases in prices and declines in purchasing power exerted a significant negative influence on savings, while the shock of the COVID-19 pandemic paradoxically led to a positive impact on savings behavior. The implications of these findings extend to policymakers, financial institutions, and the general populace, offering valuable insights to enhance financial preparedness and bolster stability amidst unpredictable economic conditions.

Recommendations: The study recommends that governments develop and implement comprehensive policies that support affordable housing, enhanced public infrastructure, and accessible healthcare, alongside fiscal prudence and consumer advocacy initiatives. It also recommends that the business community, financial institutions, and educational sectors collaborate to promote financial wellness, innovate savings products, and integrate financial education into school curricula to foster a culture of financial literacy from a young age.

Keywords: Cost of living, saving culture, inflation, Kenya