I have a big money problem. I am a freelancer with a net salary of Sh130,000. My expenses are: One-bedroom rent Sh10,000, internet Sh3,000, girlfriend Sh15,000, club Sh10,000, food and entertainment Sh10,000, electricity and water bills Sh2,000, parents Sh5,000 to Sh10,000, emergency Sh5,000.I don't have land or a car or any investment. I am heading to age 30 with nothing to speak of. I am single but I cannot explain where the balance goes after these expenses. This month, I'm using my emergency savings because I don't know what I did with the money.
Alex Kibebe is the founder of Rubiani Wealth Management Ltd and an investment consultant and business development coach
Begin by setting clear, time-bound investment goals. Given that you earn a substantive income, are single, and work remotely, you are well placed to take advantage of this season of life to build lasting wealth.
You could aim to acquire a Sh1 million plot within two years, own an apartment worth Sh3.5 million in three years, or build passive income by investing Sh2 million in treasury bonds over the next three years. Choose one or two goals and commit to achieving them.
Once you have set your priority goals, structure a monthly budget. Your discretionary spending includes girlfriend allowance Sh15,000, clubbing Sh10,000 and parental support Sh10,000 — adding up to roughly Sh35,000.
That leaves a balance of around Sh65,000. However, this balance currently seems to vanish, possibly due to untracked and impulsive spending.
To solve this and begin saving consistently, set aside a miscellaneous budget of Sh15,000 for ad hoc spending such as the purchase of clothes, and channel the remaining Sh50,000 towards savings.
Establish a system that will keep you disciplined while saving towards your goals. For example, if your goal is to purchase land, channel the Sh50,000 monthly into a Money Market Fund as soon as you receive your income (before spending on other things) or better still, automate the process through a bank standing order.
If you maintain this consistently for 18 months, you will have raised about Sh1 million that you can use to buy land.
Alternatively, you could identify a reputable land-buying company and make structured monthly instalments of the Sh50,000, saving towards the purchase.
If your goal is to buy a home or a car, consider saving through a Sacco and using its loan facility. For instance, saving Sh50,000 for six months gives you Sh300,000 which can be tripled through a loan to finance a Sh900,000 car.
Similarly, saving for 24 months will get you to Sh1,200,000 which can be leveraged into a Sh3.6 million loan to purchase a house.
To stay disciplined, consider getting accountability from a professional investment consultant or a trusted friend. At the same time, monitor areas that easily lead to overspending such as clubbing and set clear limits to safeguard your savings plan.
Once you build momentum and achieve your first goal, it becomes easier to carry that discipline into the next. Develop a practical strategy for each goal and follow through with consistency.
By doing so, you could, for example, own land and a car by age 30 and establish passive income of about Sh50,000 per month by age 33.
As a young single man, you can trim down your expenses by living minimally and cutting off or trimming down two of your most bloated expenses, girlfriend and clubbing, which have a combined allocation of Sh25,000, equivalent to an annual allocation of Sh300,000 on girlfriend and clubs. Whereas it is important to support a partner, there is a limit, especially where the partner is not a legal spouse.
There is currently no financial obligation or justification on your part for the Sh15,000 expense you have on your girlfriend. Review this expenditure or stop it forthwith. Also consider reviewing the expenditure on clubbing and the triggers behind it.
Could this be where much of your unaccounted funds end up? Note that financial decisions taken under the influence might not be the most logical or rational. If this emerges as a problem, seek professional counseling. You have time on your side and a fairly good income to achieve your goals. All the best.
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
