Are you tired of living paycheck to paycheck? Many of us Kenyans are stuck in this vicious cycle. But even before you consider this a pandemic, millions of other Kenyans live on hope, not knowing where their next meal will come from.
But as long as we have life and good health, we can overcome any obstacle. In this article, we’ll dive into practical tips that can set you on the path to financial freedom.
Crush that bad debt
We all have debt—and if you don’t, consider yourself very lucky. Whether it’s your HELB loan, a SACCO loan for a plot of land, the 5K you borrowed from a mobile app, or an unsecured business loan, debt is real.
As someone targeting financial freedom, paying off your debt should top your to-do list. Identify those high-interest loans and clear them out fast. Personal finance expert Susan Mtana advises boosting your repayment installments by reallocating funds from expenses like that pricey entertainment subscription that you can live without.
Loans, especially bad debt, are wealth killers—imagine the relief when those interest charges stop draining your hard-earned shillings!
In a previous article, the HF Group CEO Robert Kibara, talked about how to know whether the loan that you have is bad or good debt.
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Follow the 20% rule
From your net earnings, aim to invest 20%. It might seem tough at first, so start small if you need to. Consider options like money market funds, government bonds, reputable SACCOs, or even starting a business. Over time, this habit can significantly grow your wealth.
Build an emergency fund
Life is unpredictable, as we’ve learned the hard way during the COVID-19 pandemic, with massive layoffs and reduced incomes hitting many economies.
Build an emergency fund that covers 3–6 months of expenses, and keep it accessible in a high-yield savings account or a money market fund. This buffer can prevent you from resorting to expensive loans or dipping into your pension when surprises hit.
Boost your income
In Kenya’s competitive job market, focus on increasing your primary income. Upgrade your skills with courses and continuous learning, and don’t be afraid to seek promotions. HR expert James Ogweno reminds us that while hard work is important, you also need to advocate for yourself.
“Many professionals focus solely on hard work, assuming it will speak for itself. However, without visibility and advocacy, decision-makers may overlook your contributions. If senior management is unaware of your achievements, it is unlikely they will consider you for higher responsibilities,” says Ogweno.
Consider a side hustle to boost your earnings. Can your talents translate into freelance work or consultancy? Think about it, then act on it.
Diversify your income streams
Don’t put all your eggs in one basket. This famous saying always holds in wealth creation. Explore multiple sources of income, such as rental property income (even a single room is a start), dividends from Kenyan stocks (reinvesting them to harness the power of compounding), or online businesses catering to local needs like delivery services, taxi services, teaching, or graphic design.
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Invest in appreciating assets
Look for assets that grow in value over time. In Kenya, consider strategic land purchases in developing areas, buying shares in stable companies, or investing in your education for long-term earning potential.
If you have a low or irregular income, it might be best to avoid purchasing non-income-generating assets like cars.
Finance commentator Good Joseph recently stirred reactions by stating that if you earn less than KSh 100,000, it’s very unwise to buy a car—especially if you’re financing it with a bank loan.
So, remember, wealth creation is a journey, and personal finance is very personal. Start where you are, stay consistent, and watch your financial future transform. Keep hustling and stay savvy, fellow Kenyans—your journey to prosperity is just beginning!
