Only shift your focus to purchasing the car after yo have acquired a piece of land.
My name is Kelvin. I am 28, turning 29 in December. I am not married. My work is mainly freelance and consultancy. On average, I make around Sh65,000 every month. My monthly budget is as follows: Food Sh11,000, Rent – Sh15,000, WiFi – Sh2,000, Entertainment – Sh5,000, Family – Sh5,000, girlfriend – Sh5,000, Tithe – Sh6,500, Airtime – Sh1,500, Emergency and Pocket money – Sh5,000. I have savings of Sh130,000.
I don’t have assets at the moment. I would like to own a plot of land by my 29th birthday in December and a small car such as a Mazda Demio by my 30th birthday. I have estimated the cost of land at Sh700,000 and the cost of a second-hand Demio in good condition at Sh800,000. I would like to buy the plot somewhere near Nairobi. How do I achieve these goals within those timelines?
Alex Kibebe is the founder of Rubiani Wealth Management Ltd and an investment consultant and business development coach
You earn approximately Sh65,000 per month and currently spend about Sh56,000, leaving a surplus of around Sh9,000. You also have Sh130,000 in savings. Your goals are to buy a plot of land near Nairobi worth about Sh700,000 by the end of this year and to purchase a vehicle worth approximately Sh800,000 by December 2026.
Given your income and current spending levels, meeting both goals within those timelines may not be feasible without placing undue pressure on your finances. However, with a few adjustments and a slightly extended timeline, I will give you a practical and sustainable path you can follow to achieve both within a reasonable time.
First, let’s address your monthly budget. To reach your goals sustainably, aim at saving at least 25 per cent of your income—about Sh16,000 to Sh18,000 each month. To free up this amount, consider making the following adjustments.
Since you’re single, adjust to a more affordable rental house of around Sh12,000, reduce your food budget by Sh2,000 through better meal planning and avoid impulsive spending. Cap your cut entertainment and miscellaneous expenses at a combined total of Sh5,000 and based on your priorities, scale down your contributions to family to Sh3,000, your girlfriend and church to Sh3,000 for a combined total of Sh6,000 down from Sh16,500.
From these changes, take Sh18,000 monthly for saving and investment. I would advise you to channel these savings into a Money Market Fund (MMF). MMFs are ideal for short- to medium-term goals because they offer liquidity and a modest net annual return of around nine per cent (at current rates). Take time to review different fund managers and select one with competitive returns and a strong track record.
If you invest your current savings of Sh130,000 and contribute Sh18,000 monthly for the next two years and five months (up to December 2027), your investment will grow to approximately Sh700,000—enough to purchase the land. Use this period when investing to carefully search for land, conduct due diligence, and ensure all documentation is in order before making a purchase.
Once you acquire the land, shift your focus to purchasing the car. At this stage, direct your savings into a Sacco account to access a loan to purchase the car. Choose one that offers asset financing—allowing you to use the car as collateral—or one where you can access guarantors. Most Saccos offer loans of up to three times your savings. By saving Sh18,000 monthly for 15 months, you’ll accumulate Sh270,000 — enough to qualify for a loan of Sh810,000 for the car purchase.
Assuming an annual interest rate of 12 per cent and a repayment term of five years, your monthly loan repayment would be approximately Sh17,800. This fits within your current savings, allowing you to repay the loan without straining your finances. Consider utilising the vehicle for a part-time taxi-hailing side hustle. This will generate some income for you while converting the liability into a money-making asset.
Once you acquire the car, consider using it for ride-hailing services like Uber during your free time. This could provide additional income to support your budget or help you repay the loan more quickly. While the plan extends your timeline slightly, it allows you to achieve both goals by the time you turn 32 without getting into unnecessary financial distress.
Place the remaining Sh2,500 in your budgetary cuts in an MMF that you can dig into on a rainy day. You also need to track where your surplus of around Sh9,000 goes by keeping a strict track of your expenditures. Once you establish where this amount goes, redirect it to a Sacco savings account to build up your kitty and creditworthiness. You may use part of it to bridge the family cuts if there is a genuine, urgent need, and send the remainder to your Sacco. One of the recommendable things you can do is to set a Standing Order that will have your savings and investment targets deposited the moment money hits your account.
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