I am James. I earn a net salary of Sh41,000. This is how I allocate my bills; Rent-Sh8,300, Sacco-Sh10,000 (Sh5,000 saving and Sh5,000 loan), MMF-Sh5,000, Girlfriend and Brother-Sh4,000, Parents-Sh2,000, Electricity-Sh500, Shopping-Sh3,000, Transport-Sh2,000, Debt from fuliza- Sh5,000. Usually, I am unable to meet my goals after paying all the bills. I haven’t yet furnished my house with any items due to a lack of a proper strategy. For the Sacco, I took a loan from my savings and bought some household items. Now half of the allocated amount goes towards repaying that loan. For the MMF, I use the 50 bob weekly challenge to boost, and have Sh5,000 as my average monthly saving amount. I now live paycheck to paycheck. Please help.
Rhina Namsia, the founder and chief executive officer of The Acemt Consulting, a training and consultation company that provides financial planning and investment advisory. Photo | Pool
You are on the right path to saving, what you lack is a sense of direction. You also don’t have any short or long-term financial goals that you have set for your savings. Your expenditure is reasonable, and if you go by the 50/30/20 rule, then your needs, wants and savings are well distributed. A good strategy will help you define these goals based on priority. What do you desire to achieve in the near future and in the long run? For instance, would you like to own a home, and in how many years from now, would you wish to further your studies or even start another side hustle, and by when? Do not just save; save with a purpose to help you stay on course.
Avoid consumer loans such as furniture loan. That’s bad debt. Continue saving in the Sacco if you wish to take up a loan in the future for development. Sacco savings will not only earn you dividends at a rate above inflation every year, but will also enable you to access a good amount of credit, normally 3x your savings. This is a financial tool you can use for a long term project funding. Once you clear the outstanding loan, you will release an extra Sh5,000 to take your monthly Sacco savings to Sh10,000. Over a one-year period, you will have saved Sh132,000 with the additional surplus at a divided return of just 10 per cent. This will top up on the amount you’re currently building at Sh5,000 monthly. You need to keep on saving in your MMF. This should act as your emergency fund.
What does your girlfriend and brother do? What is the basis for the money you give them? Whereas it is good to support your loved ones, financial support ought to have a sense of accountability and reciprocation. Since you already have a support allocation for your parents, use this Sh4,000 to top up your surplus of Sh1,200 to come up with Sh5,200. Use this money to pay off the outstanding mobile loan of Sh5,000.
Once this debt is cleared, use these funds to gradually furnish your home and living standards one item at a time. You can do this by simply locking some funds on your mobile fixed goals account and earning interest at the same time.
Alternatively, you can enroll for some ‘lipa pole pole’ furniture and home appliances programs mainstream retailers offer at no extra cost. There are a host of money-making hustles that your brother and girlfriend can venture into and release the Sh4,000 burden that is currently straining your finances. Let them work towards self-reliance.
Do not just be content with your net salary. As life goes by, additional responsibilities and needs will set in and your net salary won’t be adequate to give you a comfortable life. Create an extra revenue stream for yourself to supplement your primary income. BY DAILY NATION