My name is Marie. I earn a net employment income of Sh57,600, and I run a side business that brings in around Sh25,000 monthly after expenses. Here’s how I spend my money:
Rent for my home and business premises: Sh30,000
Support for relatives (Black tax): Sh10,000
Support for my mum and siblings: Sh10,000
Groceries: Sh12,000
Water and power: Sh1,500
Fuel: Sh6,000
Airtime and internet: Sh2,000
Salon, makeup, and clothes: Sh10,000
Despite working so hard, it feels like a zero-sum game. I’m not seeing the fruits of my labour, and I live hand-to-mouth. I aspire to achieve financial independence, build savings, invest, and eventually buy or build my own home in Kitengela or Syokimau within the next three to five years. But how can I achieve these goals when my income barely covers my expenses?
Chacha Nyaigoti Bichang’a, financial coach, Chachanomics Consulting Firm; Author of Mastering Your Money
Your total income is Sh82,600, while your total expenditure is Sh81,500, leaving you with Sh1,100 unaccounted for. Although your income isn’t as little as you think, its effective use determines your financial progress.
Many hardworking individuals find themselves in a similar cycle of earning but not building wealth. To break free, adopt the following strategies:
 1. Conduct a lifestyle audit
Start by evaluating your financial lifestyle. Based on the provided details, you don’t have any meaningful savings or investment assets.
If you were to calculate your net worth, it would likely be zero, as you have no loans or assets. This means if you lost your job, you would be in a precarious position.
Examine your overall expenditure against your income to identify areas where you can cut costs. Reducing expenses will allow you to save and invest in profitable ventures, ultimately building financial stability.
2. Operate with a budget
A well-planned budget is essential. Consider using the 50/30/20 rule:
Adjust this rule to suit your financial goals. For instance, reduce discretionary spending to allocate more towards savings and investments.
3. Review your expenditure
Rent (Sh30,000): This accounts for 36 percent of your income, higher than the recommended 30 percent. If this figure includes both your residence and business premises, consider ways to improve your business revenue. Otherwise, moving to a more affordable house could free up funds.
Black Tax (Sh20,000): Supporting relatives is noble but financially draining. Have a candid conversation with your dependents to explain that you need to redirect some of these funds towards personal goals.
4. Establish savings and investments
Set up a savings and investment plan. Allocate at least 10 percent of your income to a reputable Sacco (Sh10,000), which offers dividends, loan opportunities, and fosters disciplined saving habits. Additionally:
Emergency Fund: Save Sh7,000 monthly to build a cushion for unforeseen events.
Insurance Policy: Invest Sh8,000 in a life or education policy.
By consistently saving Sh24,780 monthly, you could accumulate between Sh360,000 and Sh600,000 within three to five years. This amount can act as security for a Sacco loan to buy a plot in your desired location. In the meantime, focus on expanding your business for higher returns.
 5. Prioritise financial literacy
A sound financial plan anchored on clear goals will guide your journey. Continuously evaluate your progress and make adjustments where necessary. Invest in improving your skillset and learn more about personal finance to manage your money effectively.
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