The Question: My name is James and I am 25 years old. I am not yet employed but I am able to create between Sh. 20,000 and Sh. 45,000 monthly from doing online jobs. In the end of the month, though, I am left with Sh. 1,000 or less.

This has been too puzzling since I earn over Sh. 20,000. I don’t pay rent. I mainly use the money I earn on eating and purchasing devices for my personal projects which comes to a total of almost Sh. 9,000 per month. I also spend on black tax (helping relatives with emergencies).

I recently believed that I wasn’t doing well financially because I don’t pay tithe and so I started paying tithe but I am still not improving. I have read the book rich dad and poor dad which is against saving money and so I don’t save. Should I start saving? Should I stop tithing? What do I do to get out of this situation?

The Expert’s Take:

The fact that you finish all the money you earn without a trace means that you have no proper financial planning and goals for your future whether short or long term.

Ask yourself who you are, what are your values as a person and what do you desire to achieve in 1, 5 or even 10 years. These will define your goals which in turn should be able to align with your finances.

For example, do you wish to do further studies, do you wish to own a home in future, what do you do for fun, travel? Then start saving towards these defined goals.

At 25, there’s a lot to learn about money management. Invest in financial literacy and get to understand the difference between saving and investing, money management, how to multiply money responsibly and grow wealth.

It’s great that you have read Robert Kiyosaski’s book Rich Dad, Poor Dad. It shouldn’t stop at that. There are several other books that talk about money on different topics such as investing, money management, debt etc.

Rich Dad, Poor Dad does not only speak about saving not being a good thing. It speaks about using your money to build wealth by acquiring assets and not liabilities, it speaks about debt management, and so much more.

Details of over Sh. 300,000 monthly salary each police officer in Haiti is earning

Saving is simply putting money aside for future use and it is very important as it covers liquidity when needed.

Investing on the other hand is buying assets that can give you back a return in future. What you need are some investments besides the savings in your portfolio.

As a beginner learn different types of asset classes in the market that you can begin with such as stocks, treasury bills, etc; learn how to budget so you can be able to manage your money well.

Use the 50/30/20 rule that says 50% of your income should cater for your basic needs, 30% for your wants in this case can be entertainment, lunches, emergency funds can go here, and 20% to go into savings and investments.

This way once your earnings come in they will be effectively directed where they need to be through the goals you defined above.

Tithing is not a bad thing if you’re a believer in its practice. It shouldn’t, however, make you think that it will improve your finances if you your financial management is poor. It is your financial habits that define what you end up with in the end.

Track how you spend your money and where it goes. It seems most of it is black tax. Include black tax in your category of wants and set money aside for it. Then only use what’s in that fund for that particular purpose only.

You see, you give out all your money because you have no ambitions and goals of your own. People are using your money to meet their goals and needs because you have none for yourself.

Once you have them, you will be able to say a firm no to your relatives when there are no funds to fund their emergencies.

Stop enabling them to depend on you as well. If you can’t say no when earning Sh. 20,000, it will be worse when your income increases.

Earning an irregular income can be challenging in so many ways as well. Do an average of what you earn per month and create a budget around that. Any extras can then go into investments and savings.

In summary, put the following in practice and you will see a difference;

1). Invest in yourself and more knowledge on financial literacy. Read more books on investments and money management. This will go a long way in understanding what to invest in.

2). Define your values as a person. These values will help you build on current and future financial goals that will open your eyes on where to put your money.

3). Track your spending. Account for every penny that goes out. This way you will be able to know where your money goes. You cant manage what you don’t know and knowing where your money goes is the first step.

4). Have a budget. This should be a tool that incorporates your goals above and by using the 50/30/20 Rule, you can be able to allocate your income well. A budget includes sources of incomes too, this category can help you know if you need to improve on your income streams.

5). Lastly, learn to say No to extra black tax and pay yourself first through your investments and savings accounts.

This personal finance question was answered by Rhina Namsia. Ms Namsia is the founder of The Acemt Consulting, a training and consultation company that provides financial planning and investment advisory.