My name is Emerson. I am a bachelor with two young children from failed relationships. I earn Sh12,000. I spend as follows; rent Sh5,500, Sacco Sh500, alumni chama Sh2,000, one baby mama Sh1,200, and electricity token Sh100. 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 Sh2,000 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 children and at the same time cater to my life.
Chacha Nyaigoti Bichang’a, a financial coach at Chachanomics Consulting Firm and the author of Mastering Your Money
Your total expenditure is Sh11,300. You have not itemised the expenses for food and general upkeep. Your salary of Sh12,000 is indeed too little to cater for all your needs, including educating your two children. To attain financial stability, you need to do the following:
a). Rent: You are spending more money on rent (46 per cent) than the recommended average of 15 per cent. 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 Sh3,000. You’ll get an extra Sh2,500 from this adjustment.
b). Alumni Chama constitutes 16.7 percent. Evaluate whether there is a value addition to the Sh2,000 you contribute every month. Is your Alumni Chama a mere merry-go-round and does your 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 – Sh1,200. 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 Sh2,000 that you spend for saving, entertainment or emergency should be channeled to an interest earning money market fund earning at least 9 percent compound interest. It should act as your emergency buffer.
From these adjustments, you will have a disposable amount of Sh3,200.
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 Sh3,200 towards one of the children and once your income improves procure another policy for the second child.
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 customise your bicycle to run short-distance boda boda services in your town? Can you get accepted at a car wash yard for weekend jobs and after-work evening jobs? If you have a skill you can commercialise, put word out and have people know you’re for hire.
4). Introspection: You already have two children whose care you are not affording. Get a counsellor for therapy to identify why you seem to be having problematic relationships and deal with any psychological issues that might be stemming from them.
If you have any money problems, send us an email at [email protected] and leave your number for contact. Money questions will be answered on this column.
