Living hand to mouth despite earning a reasonable income is a common financial challenge.
My name is Janet. I am a 32-year-old mum of two. I have been working for the past 10 years but have nothing to show for it. Until this year, my salary was around Sh35,000 net and I mostly lived hand to mouth, with the salary going to rent, school fees, family and such expenses.
I joined several merry-go-round chamas but the money I got always ended up plugging debts. This year, I got another job that has been paying me around Sh118,000 net. Still, I am living hand to mouth with no significant savings to show for it. The only thing I can show is a better rental house (Sh40,000), better furniture and better private school for my two children (Sh20,000 per month).
I spend Sh20,000 on shopping and groceries, Sh5,000 on salon. I took a Sh500,000 two-year loan in June to start a mobile phones repair business for my brother that has not picked up yet. I pay around Sh24,500 for this loan. I also send my mum Sh5,000 monthly support.
I think I have a problem with budgeting, saving, and investing. If I lost this job today, I would have nothing to show for it. I need help in budgeting, saving, investing for my Master’s, my children’s future, and my future too.
Alex Kibebe is the founder of Rubiani Wealth Management Ltd and an investment consultant and business development coach
Living hand to mouth despite earning a reasonable income is a common financial challenge. It is usually caused by the absence of deliberate financial planning and structure rather than inadequate earnings. As you have experienced, without clear financial structures, even a significant increase in income simply leads to higher spending rather than lasting financial progress.
To overcome this, your first step should be setting financial goals and then commit to pursuing them with discipline. Clear goals anchored in your personal priorities provide the direction and motivation needed to make consistent progress.
Based on what you’ve shared, your immediate objectives include clearing your loan, building an education fund for your Master’s studies and your children's future and establishing a financial buffer to cushion against unexpected setbacks.
In order to achieve these goals, you will need to create — and consistently follow — a realistic budget. Living within a budget helps keep your spending in check and this enables you to save consistently towards fulfilling your goals. A good starting point is to work your budget toward saving at least Sh15,000 per month.
To create this margin, I recommend reviewing a few major expense lines. Consider reducing rent to around Sh30,000 and trimming shopping and groceries to about Sh14,000. Also, work towards cutting back salon and lifestyle spending and reviewing your monthly family support to about Sh14,000.
Alongside school fees of Sh20,000 and the loan repayment of Sh24,500, your total expenses would come to approximately Sh99,500 leaving around Sh15,000 per month for saving and investment. This amount can go higher to Sh25,000 if you are able to trim your rent to a decent space costing Sh20,000 per month.
The extra Sh10,000 can be directed towards paying off your loan faster by increasing the amount you pay in monthly instalments. Note that once fully repaid, you will unlock Sh34,500 (Sh24,500+Sh10,000), to accelerate your savings towards financial and academic investments.
Once you adjust your lifestyle and create room for savings, the next step is to put that money to work. A money market fund (MMF) is an excellent starting point. MMFs are low-risk investment accounts that allow you to start with as little as Sh1,000 and offer attractive returns, currently averaging around 10 per cent per annum. They also offer flexibility, allowing you to top up regularly and withdraw your money when needed, making them ideal for building your emergency fund.
Compare the MMF providers available and choose a credible fund manager with a solid track record and competitive rates. To stay consistent in your savings, I would advise you to set up a bank standing order so that your savings are transferred automatically every month, immediately after your salary is received. If discipline is still a challenge, consider involving a trusted accountability partner or working with a financial adviser to help you stay on track.
If you consistently invest Sh15,000 per month into a money market fund, you’ll accumulate approximately Sh190,000 within a year, including interest. This can serve as your emergency buffer. Once that is in place, consider opening separate investment accounts for your Master’s degree and your children’s education.
For education savings, an MMF remains a solid choice, but you may also explore alternatives such as education insurance policies for structured, long-term saving or save with a Sacco if you are considering some loans to boost your contributions.
After your two-year loan is fully repaid, redirecting the Sh24,500 monthly repayment into your education fund can significantly accelerate your financial progress. In just one year, this alone can grow into a family education fund of approximately Sh450,000, giving you meaningful traction toward your goals.
Under the new curriculum-based education, you may also want to consider reputable public schools within your area. This will help you reduce the amount you pay in school fees (which currently stands at about Sh60,000 per three-month term), a saving that you can shelve in an interest-earning fund or Sacco account and use it to offload the burden of higher fees that will inevitably come with senior schools.
With time and as your saving discipline strengthens, you can start working towards achieving larger goals, such as owning a home.
If you have any money problems, send us an email at [email protected]
