I am an unmarried high school teacher aged 26 with no children. I have a net pay of around Sh44,000. I live close to my place of work and don’t spend on transport, save for occasional boda boda rides. I have a stationery, printing, typesetting and internet cyber services side hustle that gives me around Sh20,000 net.
My monthly budget is as follows: Rent 10,000, Token 1,000, Water 700, Boyfriend 4,000, Food and Groceries 15,000, Helb 5,100, Personal grooming (Hair, nails, makeup, and clothes) 10,000, Airtime and internet 2,000, GoTv Supa 2,100, Chama 5,000, Mum 4,000, Tithe 4,400.
Despite having a full-time job and a side hustle, I am always living hand to mouth and sometimes I am forced to take mobile loans to cover unexpected miscellaneous expenses. Most of my friends have bought cars or land and I feel like I am being left behind. Some are primary teachers with lower salaries and they are doing better than me.
I would like to enrol for a Master’s degree but I have no savings. I am contemplating taking a Sh1 million loan to either buy land or a Nissan Juke or Toyota Vitz, or enrol for a Master’s degree to have something to show off as well. Is this a good idea?
Alex Kibebe is the founder of Rubiani Wealth Management Ltd and an investment consultant and business development coach
It is commendable that at this early stage in your career, you have established a successful side business and are thinking seriously about your financial future. If you make the right moves, you can set yourself up for long-term financial stability.
Your total monthly income is Sh64,000 (salary plus side hustle), while your expenses total about Sh63,300. This leaves you with little room for saving, which explains why you often borrow for emergencies. To make meaningful financial progress, cut back on certain expenses and create space for consistent saving and investing – and do so before considering any form of borrowing.
The most important step is to define your financial goals clearly. That way, your financial decisions are guided by your own priorities — not by pressure from others. Start by deciding what matters most to you and in what order. For example, you could plan to enrol for a Master’s degree within two years, buy a car after that, and eventually purchase land and build a home.
The next step is to create a budget that aligns with these goals and helps you build the necessary financial discipline. I recommend the 50:30:20 rule where 50 per cent of your income goes to needs, 30 per cent to wants and 20 per cent to savings. Based on your Sh64,000 income, aim to limit your needs to Sh32,000, wants to Sh19,000, and save at least Sh13,000 monthly.
To achieve this, you'll need to revise your current spending. Your food and grocery budget of Sh15,000 is quite high and should be reduced to around Sh9,000 by shopping in bulk, meal planning and avoiding impulse spending. Personal grooming could also be scaled down to about Sh6,000 by focusing on essentials.
You can also reduce support to your boyfriend to Sh2,000 and to your mum to Sh3,000. These adjustments could free up Sh13,000 which you can save consistently. This amount can also increase to Sh15,000 if the boyfriend expense is eliminated completely as it is currently not clear why you have that allocation in your monthly budget.
Once your budget is in place, set aside your savings immediately upon receiving your income — not after spending — to ensure consistency. Automating your savings through a bank standing order could also ensure you save every month without fail. I also recommend saving in a Money Market Fund (MMF), which is low-risk, offers competitive returns of around 10 per cent per year and gives you easy access to your funds especially for emergencies. Consider saving with a Sacco where your contributions can help you qualify for affordable credit in future.
With this saving discipline, you can now work towards fulfilling your goals. For example, by investing consistently in an MMF for two years, you could raise about Sh330,000 to help fund your Master’s degree. Use the same approach to meet your other investment goals – such as buying a car, land or expanding your business.
Avoid taking the Sh1 million loan for now. Repaying such a loan would strain your budget and delay your progress, especially if the land or car doesn’t generate income. Instead, focus on saving, aligning your spending with your goals, and living within your means. This will put you firmly on the path to financial freedom and long-term wealth.
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