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The dashboard of a Subaru Forester.
I am in my late 20s. I have a job and a girlfriend. I earn about Sh46,000 net every month. I don't have a major loan besides the Sh1,000 to Sh2,000 M-Shwari casual loans. My total savings are below Sh100,000. My main expenses are on rent, girlfriend allowance and lifestyle. As I approach my 30s, I would like to own a car. I particularly admire Subaru Forester. I am thinking of taking a loan from my bank and securing it with my paycheck as I am on permanent and pensionable terms.
I am targeting a Sh2 million loan with a duration of five years. My girlfriend thinks I am making a mistake. She says I should own land and build a home first. But I feel like she is just manipulating me into family thoughts and marriage which I am not ready for. My current goals are Subaru Forester and a comfortable life. I come from a poor background and have struggled a lot. I want to enjoy life and visit places I never afforded in my earlier years. Denno
Subaru Forester .
Muthoni Njakwe is an accountant and the author of personal finance book 'Her Shilling, Her Power: A Woman’s Guide to Financial Freedom.'
Denno, allow me to speak to you like a brother. First, wanting comfort is not wrong; but wanting comfort and being able to afford it are two very different things. Let’s break everything down carefully.
You earn Sh46,000 net every month. After paying for your main expenses: rent, lifestyle, and supporting your girlfriend, there isn’t much left for savings or emergencies. Now, you’re thinking about taking a Sh2 million loan over five years to buy a Subaru Forester. Bro, you don’t really qualify for such a loan. Even if the bank approves it at a reasonable interest rate, your monthly repayment would likely fall between Sh40,000 and Sh50,000.
Think about that for a moment: that is almost your entire salary. Loan repayments should take only 20-30 per cent of your income to avoid strain. Because of this imbalance, the pressure to meet monthly repayments would almost certainly outweigh any enjoyment of owning the car.
It’s also important to understand that a car is a depreciating asset; it loses value over time . So, while it might bring temporary comfort, status, or prestige, it does not increase your net worth.
The emotional layer
You said something powerful: “I want to enjoy life and be comfortable.” That’s not greed. That’s the mindset of someone who has struggled and now wants to enjoy the rewards of hard work. But here’s the hard truth: comfort financed by debt is not true comfort. It is pressure dressed up as lifestyle.
How will you truly enjoy that Forester if you are under constant pressure to repay a huge loan for a liability? What if you can’t afford fuel, maintenance, or even basic personal needs? Think about that carefully. That’s not “enjoying life”, that’s surviving with style.
Now, about your girlfriend - is she manipulating you? Absolutely not. Most likely, she thinks your priorities are a little misplaced. Let’s be honest: is she encouraging you to invest in land because she wants stability? Because she sees long-term financial security? Or because she’s thinking about marriage?
On the other hand, are you projecting your feelings because you feel pressured about settling down, or because you’re not ready for that stage of life?
Before assuming manipulation, ask yourself: “Is she thinking about the future, or is she trying to control me?” There is a big difference. The first is care and perspective; the second is control.
To turn your goals into reality, let’s break the process into clear and actionable steps:
Step 1: Strengthen your base
The first and most important step is to build a strong financial foundation. Start by creating an emergency fund that can cover at least six months of your essential expenses. With a salary of Sh46,000, this means your target savings should be around Sh300,000 to Sh500,000.
Why is this important? Life is unpredictable - emergencies like medical bills, sudden repairs, or unexpected job issues can happen to anyone. Without a financial cushion, even a small problem can turn into a crisis. An emergency fund ensures that you can handle life’s surprises without going deeper into debt or sacrificing your basic comfort.
During this time, focus on controlling unnecessary spending, budgeting wisely, and setting aside a fixed amount each month.
Step 2: Increase your income
Your biggest challenge right now is not desire, it’s that your income level doesn’t match your ambition. To comfortably afford a Sh2 million car like a Subaru Forester, you would typically need a monthly salary in the range of Sh120,000 to Sh200,000. At your current income, taking such a loan would create immense financial pressure.
Instead of borrowing to upgrade your lifestyle, focus on upgrading your income first. This could mean asking for a salary increase or promotion at your current job, taking on side hustles or freelance work to generate additional income, or acquiring new skills that make you more valuable in the job market and open doors to higher-paying opportunities.
Step 3: Smart car planning and alternative asset building
Subaru Forester.
Once you have a strong financial base and your income is growing, it’s time to plan smartly for your car and other goals. A Subaru Forester is a great car, but it’s a depreciating asset; it loses value over time and doesn’t generate income. That’s why it’s important to balance your lifestyle desires with wealth-building priorities.
One way to do this is to consider alternative assets first, like investments or even land which can appreciate over time and increase your net worth. Even buying a small piece of land now can give you long-term security and a foundation for bigger goals in the future. Meanwhile, you can save systematically for the car, aiming to buy it either partially or fully with cash rather than relying on heavy debt.
Step 4: Track progress and stay disciplined
Even with a solid plan, success comes from consistent monitoring and discipline. Track your savings, watch your spending, and revisit your goals regularly. Celebrate small wins like reaching your first 100k in savings and adjust your plan as needed.
Denno, the path to comfort and freedom isn’t about shortcuts or expensive loans. It’s about building a strong foundation, growing your income, planning wisely, and staying disciplined. Life is meant to be enjoyed, but true comfort comes when it’s earned safely and sustainably..
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I have rentals and pension; is it time for me to retire?
The Retirement Benefits Authority blames the accumulation of unremitted retirement savings deductions on inefficiencies by pension scheme trustees.
I am 53 years old. I am a manager with an NGO and earn Sh428,000 gross pay. I have rental units that earn me 164,000 a month. I also have a small business that earns a net of 40,000 a month. I also have Sacco investments that bring in 10,000 per month but paid annually. I am married and my wife, 46 years, earns a gross of 216,000. My expenses are as follows;
-loan 1 unsecured 146,000 per month (for building the rentals balance 5m)
-Loan 2 secured via rent 34,000 per month (balance 900,000)
-Loan 3 5400 per month (balance 130,000)
- Fees for my 3 kids 100,000 per term
- Agent for my houses 5,500 per month
-Watchman 4,000 per month
-Maintenance 5,000 per month
-Cable TV 6,500 per month
-Power 7,000 per month
-Club payment 8,000 per month
-Shopping for the house 40,000 per month
-Fuel for my wife 40,000 per month (she works in a different county)
-My wife’s expenses and chama 40,000
-Miscellaneous 10,000 per month
-Grooming 15,000 per month
I also have pension of Sh15 million as at the end of 2024, my pension increases by Sh76,000 per month. My plan is to retire and access my pension tax free as per the amended law and sort my loans as well as invest the balance in income generating options. My rental units are valued at Sh23.4 million as per the bank that financed me, and I have other land that is undeveloped valued at Sh5 million. I own the house I live in Nairobi. Is it a sound decision to want to retire and what options can you give for investment? TWK
Dominic Karanja, a financial planning and investments consultant.
To effectively replace employment income in retirement, it is advisable to consider allocating funds to low-risk, liquid assets, targeting annual post-withholding tax returns of 8–12 percent
You have successfully established a robust portfolio of assets and multiple sources of income over time. Currently, your household enjoys a healthy monthly income of approximately Sh654,000, comprising of your Salary (Net approx.) Sh290,000, Rent (Gross) Sh164,000, Business (Net) Sh40,000, and Wife’s Salary (Net approx.) Sh150,000, which results in a considerable surplus after accounting for total expenses of Sh391,400.
Nonetheless, it is noteworthy that your debt-to-income ratio remains elevated, as 60 percent of your personal net salary is allocated to servicing loan obligations amounting to Sh185,400. While the diversification of your income across employment, rental property, and business ventures offers a reliable financial foundation, the key challenge ahead is to navigate from this debt-intensive phase towards a more efficient, cash-flow-positive structure in preparation for retirement.
Opting for early retirement is a prudent choice, particularly if you implement an approach to promptly eliminate your Sh6.03 million debt upon retirement. With a pension payout of Sh15 million and the provisions of the Tax Laws Finance Act 2025 and Tax Laws Amendment Act 2024 enabling a tax-free transition, it is advisable to avoid carrying substantial fixed loan costs into retirement.
Allocating a portion of your lump sum to settle these liabilities immediately will convert Sh185,400 in monthly debt service into available cash flow. This strategy will provide a stable net passive income of approximately Sh190,000 per month from rental properties and business operations, ensuring that your post-retirement lifestyle is supported by dependable assets rather than being burdened by high-interest obligations.
To effectively replace employment income in retirement, it is advisable to consider allocating funds to low-risk, liquid assets, targeting annual post-withholding tax returns of 8–12 percent (with applicable interest/dividend tax rates ranging from 5–15 percent).
For a person with a Sh10 million pension lump sum (net of debt obligations), several viable income-generating opportunities exist within the Kenyan market. Government-backed instruments such as Treasury Bonds and Infrastructure Bonds offer attractive yields, potentially generating monthly income of between Sh100,000 and Sh117,000, while Money Market Funds (MMFs) provide high liquidity, daily compounding, and competitive returns within the 6–12 percent range.
For an investor willing to accept higher risk, developing the existing land holdings into additional rental units may yield returns of 6–10 percent plus potential property appreciation. The most resilient retirement strategy integrates multiple asset classes combining the security of government securities, the liquidity of MMFs, and the growth prospects of real estate. This diversified approach is designed to ensure that retirement income not only meets immediate needs but also preserves purchasing power against inflation and provides flexibility for unforeseen expenses. To strengthen your retirement plan, it is advisable to convert dormant capital into active cash flow.
For instance, the Sh5M undeveloped land could be more beneficial if liquidated and reinvested in higher-yielding assets. The transition is further supported by your spouse’s ongoing income; however, it would be prudent to review and optimize household expenditures, particularly fuel and commuting costs, after concluding your professional management role. Lastly, ensure full compliance with tax regulations by filing your Residential Rental Income Tax at the applicable rate of 7.5 percent on gross rental income for landlords within your category.
When planning for retirement, it’s important to be aware of several significant risks. Ongoing school fees for your children mean you still have considerable education expenses, necessitating a steady cash flow. You’ll also need to secure health insurance after retiring, as healthcare costs tend to rise with age and employer-provided coverage will end.
Most of your wealth is tied up in rental properties, which makes you vulnerable to issues like vacancies, tenants failing to pay, regulatory changes, or costly unexpected repairs. Inflation in Kenya, averaging 2.5–7.5 percent each year, will steadily reduce your purchasing power, so your retirement income must keep pace with increasing living expenses.
Postponing it retirement by two years would significantly enhance your security. Your rental properties will likely be steadier, reducing uncertainty in your income. In short, waiting to retire slightly lowers your financial risks and provides greater confidence and flexibility for the future.
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