The Question: I am a bachelor with two baby mamas and two little kids from failed relationships. I earn Sh. 12,000. I spend as follows; rent 5,500, Sacco 500, alumni chama 2,000, one of the baby mamas 1,200, and electricity token 100. Water is inclusive in rent.
I don’t spend on transport as I bought a mountain bike before I had the babies to cater for my transportation needs). I set aside 2,000 for saving or entertainment or emergency – whichever comes first. I seek your financial wisdom to help me weave my way and attain financial stability.
I want to be able to cater for the education needs of my kids and at the same time cater for my needs too.
The Expert’s Answer:Â
Your total expenditure is Sh. 11,300 and an unaccounted for balance of Sh. 700. You have not itemized the expenses for food and general upkeep.
Your salary of Sh. 12,000 is indeed too little to cater for all your needs, including educating your two kids, considering the high cost of living nowadays. To attain financial stability, you need to do the following:
1). Review your expenditure: Adjust your expenses as shown below:
a). Rent: You are spending more money on rent (46%) than the recommended average of 15%. This means that with the salary you earn, you are living in a house you can’t afford. Your rent should be within the range of Sh. 3,000. This will mostly cater for a single room upcountry. You’ll get an extra Sh. 2,500 from this adjustment.
b). Alumni Chama constitutes 16.7%. Evaluate whether there is value addition to the Sh. 2,000 you contribute every month. In other words: Is your Alumni Chama a mere merry-go-round or is it a membership monthly subscription?
Does the money earn any returns at the end of the year? If the money doesn’t earn you any profit, you should reconsider channeling it to the Sacco which has more benefits.
c). One baby mama – Sh. 1,200. Is this money meant for child upkeep? If it is, what happens to the second baby? What arrangement do you have with the mother of your second baby?
d). The Sh. 2,000 that you spend for saving, entertainment or emergency should be channeled to an interest earning money market fund earning at least 9% compound interest. It should act as your emergency buffer.
From these adjustments, you will have a disposable amount of Sh. 3,200 (saving from rent and unaccounted for balance).
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2). Procure two education policies for your children: Find out the most affordable insurance companies that offer reliable education plans for children going by your current income.
Channel the remaining disposable amount of Sh. 3,200 towards one of the children and once your income improves procure another policy for the second child.
For instance, you can start this with the child who isn’t currently getting any support from you. This will ease your burden down the line when the children get to school going age.
3). Side hustle: You must create additional income streams. Don’t be choosy about jobs. Scan your environment and identify possible side hustles you can do during your spare time.
For instance, can you have someone lend you their motorbike for early evenings to midnight boda boda job? Can you customize your bicycle to run short distance boda boda services in your town in the early morning?
Can you get accepted at a car wash yard for weekend jobs and after-work evening jobs? These are all activities that can earn you an extra Sh. 250 to Sh. 600 per day and will take your income to a net of between Sh. 19,500 and Sh. 30,000. If you have a skill you can commercialize, put word out and have people know you’re for hire.
4). Introspection: You already have two kids whose care you are not affording. Having kids comes with huge financial expectations. You can’t go around siring kids and blaming your failure at parenthood on failed relationships.
Keep your pants up until such a time when you can be financially able to raise any additional kids. Get a counselor for therapy to identify why you seem to be having problematic relationships and deal with any psychological issues that might be stemming from them.
The answer to this financial question was provided by Chacha Nyaigoti Bichang’a, a financial coach at Chachanomics Consulting Firm and the author of Mastering Your Money. A version of this answer was previously published in the Saturday Magazine. The Saturday Magazine is a publication of the Nation Media Group.
