When my husband lost his job, he was in the process of building our family home in Kamangu.
I am married with two children aged 10 and seven. My husband is currently jobless and wholly reliant on me. I earn a net salary of Sh76,000 per month.
My monthly budget is as follows: Rent Sh13,000, food and groceries Sh20,000, power, water and GoTV Sh4,000, chamas Sh5,000, tithe Sh4,800, husband allowance Sh5,000, irregular bank savings account Sh4,000, miscellaneous debts Sh3,000, black tax Sh2,000, fees Sh10,000.
When my husband lost his job, he was in the process of building our family home in Kamangu. He had built the structure and the roof.
After losing his job, he took his savings of around Sh800,000 and tried an investment that ended badly. He is now broke and I feel I should step in and complete the project as an appreciation of the sacrifices he took when he was the breadwinner.
I estimate that with Sh1.5 million, I will finish the project within six to 12 months. I have bank savings of Sh270,000 but I have not saved for a while now as most of my money goes into the family budget.
How do I reorganise my money to realise this goal?
Alex Kibebe is the founder of Rubiani Wealth Management Ltd and an investment consultant and business development coach
Explore a home construction loan through a bank or Sacco that partners with the Kenya Mortgage Refinance Company (KMRC). KMRC was set up by the government to make home loans more affordable, offering rates of about nine per cent with repayment periods of up to 25 years. This facility can provide the amount you need as your Sh1.5 million requirement is well within the loan limits, and your salary falls within the qualifying bracket. You can check for the partnering institutions on the KMRC website.
To qualify, you will need proof of land ownership (in your name or jointly with your husband), approved building plans and structural drawings, a priced bill of quantities, and profiles for the professionals involved (architect, contractor, and quantity surveyor). You may also need approvals from NEMA and the National Construction Authority. Gathering this documentation can take several months, so you can use the next six months to prepare the documents and apply for the loan. If you plan to take the KMRC loan through a Sacco, you may need to save with the Sacco for a given period to qualify.
To achieve all this and to create room for future loan repayments, you may need to adjust your household budget. A KMRC loan of Sh1.5 million, if taken for 10 years, would cost you about Sh19,000 per month. To make this manageable, set aside at least Sh10,000 every month starting now by cutting back on non-essential expenses. For instance, review your spending on items such as pay TV, chamas, allowances, and even food costs by adopting meal planning, bulk buying, or shopping at discount markets. These small adjustments will prepare you for the loan repayment and cover other related costs.
Move your current account savings of Sh270,000 to a Money Market Fund (MMF), which is currently returning a net of about eight per cent per year while still allowing easy access to your money. The MMF can serve as your buffer for loan-related costs such as insurance, emergencies, or any shortfall during construction. Your monthly savings should also go into this fund while you wait for the loan.
Once you access the home construction loan, channel the Sh10,000 you were setting aside for saving towards loan repayment and top up the balance from your Money Market Fund (MMF) during the construction phase. Once you complete constructing the house, redirect the Sh13,000 currently spent on rent towards the loan repayment and top it up with Sh6,000 from your income. This will allow you to continue growing your MMF buffer and emergency fund.
If you are unable to access the KMRC-backed facility, your next best option would be a Sacco loan. In that case, you may need to save for a longer period and possibly raise a portion of the construction money before borrowing.
You have mentioned that your husband had already built the main structure and roofing. This implies that the remaining sections might include plastering, doors and windows, and interior décor. Approach the final touches in phases. First, plaster the walls and install the windows and doors, after which you can move in. This should not cost you more than Sh200,000. The remaining sections can then be developed and finished at your own pace and without the pressure of a loan. This will also give your husband time to recover emotionally and hopefully get back on his feet financially and career-wise. In addition, you will free up Sh13,000 that has been going to rent every month for saving and, or reinvestment into the house finishes, such as paint, which your husband can do as a form of DIY.
You may also want to readjust your budget by cutting some expenses such as tithe until your financial situation improves. Tithe is a matter of personal belief but it is not mandatory. There is no point in struggling when this allocation can alleviate some of the stresses that your family is going through.
Also, you may want to address the miscellaneous debts on which you spend Sh3,000 monthly. This is a significant amount to be spending on debt that you cannot justify. From water, power and television, try to cut this budget from Sh4,000 to Sh2,500. As you track your money, regularise your monthly savings of Sh4,000 and have this money plus the disposable income you collect from your budgetary cuts saved in a Sacco account to start building your Sacco savings profile.
This total amount should be around Sh10,300 (drawn from tithe, utilities, regularised bank savings). In one year, you will have saved over Sh120,000, earned dividends, and have a leeway to finance a fresh phase of your home’s finishing.
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