I’m starting a Sh35,000 pay job in January, how do I plan to buy property?

I am starting a new Sh35,000 pay job in January. Help me use it to buy property, Kinuthia Mburu

My name is Henry. I am married with one child due to start nursery school next year. I am a newly employed secondary school teacher set to report in January.

I anticipate a basic salary of Sh35, 000. I currently work online and make Sh30, 000 monthly. I pay university fees for my brother who is in third year semester two.

I pay Sh60, 000 average as school fees per semester and would like to relocate from home closer to work and rent a house at Sh7, 000. My wife has no job; she is a form four leaver with a Grade of C.

I have already built a decent house for my parents and they now don't require much financial help from me. I desire to manage my finances properly, have property, buy a car and grow as I start my new job.

How do I achieve this?

Alex Kibebe, founder of Rubiani Wealth Management Ltd, investment consultant and business development coach

Write down your investment goals: Your identifiable goals include owning a home, buying a car and some properties. Make these goals more specific and time bound. For example, you can plan to be financially free in 10 years, buy land and build your home in 7 years, take your family on a holiday every 2 years or start a business for your wife in 2 years. It will now be easier to review your performance and remain accountable.

Have a budget and stick to it: To write a budget, you start off with your income. In your case, you expect a salary of Sh 30,000 starting January and your online work continues to give you an income of at least Sh 30,000. This totals Sh. 60,000.

List your expenses based on priority. From the details you have provided, your expenses include rent – Sh 7,000, your brother’s school fees of Sh60, 000 a semester (about Sh 10,000 per month) and your child’s school fees from next year. Include all your other expenses such as home upkeep, transport costs, family recreation, medical insurance and assisting your parents.

You also need to include an amount that you will consistently save and invest towards fulfilling your long-term financial goals. There are different methods and guides to prudently allocate your budget. The 50:30:20 rule is highly recommended as follows: 50% of your net income to your basic needs (in your case food, rent, your home upkeep and school fees); 30% to wants (those things that you can do without such as family holiday and home luxuries); and 20% for savings. If you use this rule as a guide, keep your basics to Sh30, 000, your other expenses at Sh18, 000 and set aside Sh12, 000 for your savings.

You can readjust this budget by moving to a house closer to your workplace and thereby eliminating transport costs, and having your spouse take up a small job. With a KCSE Grade of C, her earnings (say for a year) can be used to get her additional skills to make her more marketable and improve family an income. By this time, your sibling should be done with their studies and free up a surplus of about Sh 10,000 monthly.

Save up and invest: After settling on a budget, determine how to invest your savings. I recommend you accumulate your savings in a Sacco or a Money Market Mutual Fund (MMF) for a start. These two products are ideal for investing Sh 12,000 savings, have a low capital risk (your savings are protected), while giving you a decent return.

The difference is that Saccos enable you to borrow funds against your savings while MMF gives you easier access to your invested funds. Save consistently for one year to get Sh 144,000. Once you have attained the discipline of investing in a Sacco or MMF over the one year, you can (with proper advice) diversify your portfolio to other products such as stocks and treasury products. Be careful not to get trapped in get-rich-quick-schemes. To avoid these schemes, invest only in products that you understand well, those that are regulated preferably by the government and those with proven performance.

Be Consistent: Finally, one of the major pitfalls of successful investing is indiscipline and procrastination. As you get started with your financial journey, you will discover that there are always urgent and pressing needs that may keep you from savings. One way to remain consistent with investing is by placing a bank standing order to automate your savings to the Sacco or MMF account.

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.