My name is George. I am a nurse working on locum basis. I make Sh. 2, 000 daily but I am not able to save any money. I pay Sh. 11,200 house rent, Sh. 1,899 for GoTv Supa, Sh. 3,000 for my university student cousin’ s rent, Sh. 8,000 fee and transport for my cousin who’s doing a short course, Sh. 1,000 Kenya Power tokens, Sh. 5,000 family, transport Sh. 3,000, food Sh. 6,500.
My jobless girlfriend recently moved in with me. I am now supporting her sister who is at a nearby school with food and personal effects of Sh. 2,500 monthly, house Wi-Fi Sh. 1,000, and miscellaneous Sh. 6,000.
I had initially rejected this but she threatened to breakup. I complied because I love her more than anything in the world. But I am struggling. If my job ended today I don’t know what I would do. How do I manage my money better? What do I need to do?
Robert Ochieng’, the founder and investment advisor at Abojani Investments.
You are left with Sh. 10,901 after deduction of listed expenses totaling Sh. 49,099. I presume that the balance goes into your girlfriend’s upkeep including some of your miscellaneous expenses as well.
This basically means you aren’t saving anything and are likely to get into debt to keep on. I commend you for the assistance you’ve extended to your cousin. However, you’ve fallen victim to emotional blackmail.
Your girlfriend’s threat to breakup the relationship if you stopped spending Sh. 9,500 on her sister is outright manipulation. She should respect you and your money as you profess to love her.
You should establish boundaries for your scarce resources to ward off further manipulation. The budget rule of 50:30:20 – 50% to savings, 30% to wants, and 20% to savings and investments hasn’t worked in your case.
-Needs (rent Sh. 11,200, food and transport Sh. 9,500, electricity Sh1,000, tv Sh. 1,899) total Sh. 23,599 – 39.3%
-Wants (cousins rent and fees Sh11,000, family Sh. 5,000, girlfriend’s sister Sh. 9,500) total Sh. 25,500 – 42.5%
-The balance of Sh. 10,901 is lost in between.
If it’s your girlfriend that you intend to marry, encourage her to develop her professional undertaking to avoid total dependency on you as you settle to start a family. With combined incomes in future, you should be able to meet joint short, medium and long term goals for financial prosperity.
Should I pay Nairobi agent Sh. 850,000 to get me bank statement, Canada visit visa?
In a decade, your savings and investments will have paid off as you will reap from compounding interest. Be keen to delay gratification and reinvest your interests or dividends in your chosen investments.
Although the young are characterized by high risk appetite, do not be tempted to dabble in investments you know little about.
Do not fall into get rich quick schemes or peer pressure to allocate your limited resources to “investments” that promise too much within short periods of time.
Saving should start immediately you earn an income. It is recommended that you save at least 10% of your income when you are starting work.
As your income increases, or your budget normalizes, you should increase savings to between 15% to 20% of your income. In your case, to truly meet short term needs that may include having sufficient emergency funds covering at least 6 months of your living expenses (may be Sh. 300,000), you need to be aggressive in this.
Joining a SACCO is recommended. Find one where your colleagues at work are, so that you are able to get guarantors for loans in future.
Saving via SACCO inculcates a healthy habit and ensures the process is automated. Besides the SACCO, you may explore saving via money market funds that have a huge flexibility in terms of withdrawal.
Considering your earnings, you should aim at Sh. 10,000 monthly savings. This can be sourced by adjusting some expenses eg. Reduce girlfriend’s sister miscellaneous to Sh. 3,000. The Sh. 5,000 on family isn’t clear whether it’s your parents or otherwise. Either way, find sustainable support systems to lessen this weight on you.
Your savings/investments budget should be allocated as follows: Sh. 5,000 to a SACCO limited access account and Sh5,000 to a money market fund. In a year, the SACCO deposits will amount to Sh. 60,000 and earn about Sh. 5,000 interests.
In 5 years, this should add up to Sh. 400,000 that should get you over a million shillings loan to fund short, medium or long term goals. MMF savings of Sh. 5,000 will add up to Sh. 66,000 – inclusive of at least 10% net interests. In 5 years, this should add up to Sh. 400,000 for an emergency, or sinking fund to a project of your choice.
Consider life insurance too, especially if you expect to have a children. Life insurance covers are cheap while you are young. Benefits can be used to educate your children, pay off a mortgage or leave an inheritance