I’m a father of three with a stay-at-home wife and baby mama; How do I manage Sh68,000 salary to stop living hand to mouth?
I am 34, married with one child aged six, and I have two other children outside marriage who are twins aged eight. My wife is a stay-at-home mum. I am currently earning Sh68,000 net after getting a pay hike from Sh63,000. I don’t keep a budget but every day I leave Sh500 at home for my wife to manage the day’s meals. I also leave Sh2,000 every weekend for shopping. I pay rent Sh11,000, GoTV Sh2,600, airtime for me and my wife Sh2,000, power and water Sh2,000, mama fua Sh800 every Saturday, wife’s salon 3,000 per month, fees 5,000 per month, my other children’s mother 7,000 per month. I also squeeze in some money for beer with friends over weekends.
My long-term goals are to secure my three children’s education, even though I admit that I have not been as supportive with my other two children as I would like. Their mum has been threatening to take me to children’s court if I don’t increase my financial support. I would also like to own a vehicle and stop riding in my friends’ cars all the time. I also want to feel like a man. My mum also needs me to renovate her mud-house in the village and I estimate the cost will be around Sh500,000. So far, I have not been big on saving. I also have some minor mobile app debts, including MShwari. With my newly increased salary, how do I achieve these goals fast?
Josephine Murage is an investment banker and personal finance consultant
For your finances to improve, you and your spouse must know exactly where every coin goes. Simply meeting what you consider basic expenditures is not equivalent to being financially independent.
You and your wife need to draw up a sheet with a list of expenses and the amount of money that she allocates each expense from the amount you leave behind.
You currently leave behind Sh23,000 per month for meals and shopping, Sh3,200 for laundry services, Sh3,000 for salon, and Sh1,000 for airtime. In total, your spouse manages Sh30,200.
This leaves you with Sh32,800 out of which your remaining stated expenses take Sh28,600. This leaves you with a disposable income of Sh4,200 which probably goes to your weekend drinks and mobile loan repayments.
This means you are living paycheck to paycheck with no savings or an emergency fund. It also points to an excessive risk where the family is fully dependent on one income source.
Once you get a clearly written sheet with expenses and allocations, cut down on some expenses. For example, you spend Sh2,000 on airtime per month.
There are cheaper bundle options that can slash this down by Sh1,000. Encourage your wife to start working and generating income. Implementing the cuts without providing an alternative for her could be a source of conflict.
Once she starts working, she could take up expenses such as laundry, her airtime, and salon. This would give you Sh7,200. With your increased salary, you will have Sh12,200 disposable income even before you factor in the Sh4,200 you spend on beer. You also have a huge allocation of Sh2,600 for GoTV.
You cannot afford this at the moment. There are cheaper bouquets in the market, including the internet, and free-to-air options you may consider. Slash down this budget to a maximum of Sh1,000 and your total disposable income will come to around Sh18,000.
Start saving Sh10,000 per month in a highly reputable Sacco and Sh6,000 in a well-managed Money Market Fund (MMF). The Sacco savings will lock in annual dividends for you and start building your portfolio. In the event of future financing for a long-term project, you will have access to financing at 3X your savings. This is besides your savings earn dividends.
The MMF should be used to build your emergency kitty. Target at least one year of consistent savings at an interest rate of around 10 per cent. The remaining Sh2,000 can go towards your weekend. However, first account for all the mobile debt you have raked in and clear it.
Then put an end to that habit of borrowing. If you have money lying idle on your phone, push it to mobile MMF options which have free instant transactions. That way, any coin you have will be consistently growing.
Continue supporting your other two children, and if possible, contribute more than just finances. Meet your children and spend time with them.
Put your plan to buy a vehicle on hold for now. Once your finances improve, you may consider dedicating a kitty towards improving the standard of your mum’s house.
You could set this as a medium-term goal that you can implement after 12 to 18 months. Start gathering the materials (sand and mesh wire for the mud-wall plastering, and ballast for the floor) that you will need in phases. This would actually give you more contentment than simply buying a car to fit in with your friends or feel like a man.
Finally, your salary increase points to your capacity for higher earnings. These are traits you can exploit to create a secondary income stream. This will increase your savings and investment ability, and take you closer to your short and medium-term goals faster.
If you have any money problems, send us an email at [email protected] and leave your number for contact. Money questions will be answered in this column
