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Personal Finance

Kenyans cut out luxuries amid low salaries and job losses

Pay cut
Pay cut has forced most people to get creative on how to manage their finances. FILE PHOTO | NMG 

After salary cuts and reduced incomes from businesses, a majority of Kenyans are restructuring their lifestyles. The reduction in incomes has forced most people to get creative on how to manage their finances.

Tabitha Melanoi had always been a “lover for big brands”. Before Covid-19 ate into her earnings, she never bought unknown brands, which tend to be pricier. Today, she looks back and laughs.

“Covid-19 has opened my eyes to other more affordable brands,” says the mother-of-three says.

Tabitha, who works with an airline, is making do with 25 percent of her salary.

“Honestly, I didn’t think we’d survive. But with some adjustments, we’re doing quite well,” she says.

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These adjustments are both behavioural and purchasing changes. She buys groceries at the market, cereals from wholesale stores, follows her shopping list to the letter and no longer forces her children to eat, which reduces food wastage.

“They’re usually fussy eaters, something they got from me. If I ask them to drink yogurt and they don’t want, that's fine with me. It’s available for them when they want it,” she says.

These have considerably reduced her food expenses. She has also cut out saloon visits for her children completely, thanks to Covid-19, helping make savings.

She has been washing and braiding her two daughters’ hair, something she plans to continue post-Covid 19.

“We really don’t need to go to the salon once a week! Did I mention that I retouched my hair?” she says.

Tabitha and her husband have also discovered that they do not need artisans like plumbers; they can fix broken windows, redo their floor designs, and paint their home.

“Such sweet discoveries!” she says.

Her children are in private schools and will not be changing their schools for now.

“My husband and I decided to take our children to a school that we can afford even if one of us loses a job. That’s one of the best decisions we made,” she says.

Her biggest pandemic lesson on money is the need to have liquid cash, save more, and invest diversely.

“I’d saved money with a Sacco, but it’s inaccessible. I’ve also realised that if I can survive on 25 percent of my earnings, it means I could have saved a lot more and invested,” says Tabitha was also servicing a loan.

Fortunately, through her employer, she got a temporary moratorium.

The crisis has provided this couple with an opportunity to review their lifestyle after all this is over.

“We're now ready to build our home instead of renting, and I will sell my car and buy a smaller one," she adds.

Lucy Naipanoi has experienced how easily life can change.

“My husband and I used to drink three bottles of wine a week and eat out every weekend. I've since forgotten how the wine tastes like," she says.

An entrepreneur in the travel industry, Lucy had to sell her fridge to get money to stockpile food as she was not financially prepared.

"In January, we bought goats with the hope of selling them in April. That plan is a dead end. Markets are closed so we can't sell the goats. This has affected our income," she says.

Due to reduced earnings from the travel industry which is bearing the biggest brunt of Covid-19, she has let go of her househelp, reduced her TV subscriptions from three to one service provider, and like Tabitha, does her daughter's hair, instead of paying a hairdresser.

Is she worried about the future?

“A little bit but we’re taking it one a day at a time. We started a new business in March so we’re hoping it will work out. But, this is the last time something like this is happening to me. I'm never spending Sh2,800 per week on the wine again,” she says.

Andrew Ranja, a father-of-three and a lawyer describe himself as a “pretty disciplined spender.”

When he was young, his mother ingrained in him the discipline of saving for a rainy day.

“Covid-19 has really driven the point home; boy has it rained!” He exclaims.

Even though he and his wife, June have been living frugally, they've had to reallocate expenditure.

“We’ve cut down a little bit on extra foods like eggs, sausages, ordering out, and are we bulk buying shopping from wholesale outlets,” he says.

His children’s school is charging fees for online classes but not exorbitant.

“It’s 10 percent of the total school fees so I’ll keep the 90 percent ‘savings’ for next term or use it for something else,” he says.

Back in 2015, Andrew went through an experience that taught him that money can easily disappear.

He took this lesson to heart and admits it is one of the reasons why they have not experienced much of a lifestyle restructuring. As a disciplined spender, living within his means, he has developed a good saving habit.

He is, however, quick to note that hoarding is bad.

“My savings can only take me so far; I really have to rely on God to provide and so far He has provided miraculously,” he says.

It is not only people with children who have been forced to relook their lifestyles.

Single people are making changes too. Irene Bogonko, 32, works in the flower industry, as a production and logistics manager. Even before the crisis, the industry was already counting losses due to the December-January rains that affected flower growth which translated to lower sales.

“Covid-19 put the final nail in the coffin and we had to take a 50 percent pay cut to tide the company and ourselves through this hard time,” she says.

Her expenses had to change. First off the table were her elaborate makeup, nail, and hair expenses.

“Two months ago, I wouldn’t be caught dead wearing a synthetic weave. Look at how humble Covid-19 has made me,” Irene says waving her hair which is cheaper compared to human hair extensions which were her best buys.

While her favourite pass time was to go eat at fancy restaurants, now she is seemingly content with eating at home, experimenting with home recipes.

Working from home means no fuel expenses as well as the impulse buying that characterised her drive to and from work daily.

“Those things I used to buy on the street are not tempting me anymore,” she says.

Another exciting money-saver for Irene is the fact that there are no-evening meet-ups or parties.

“The normal world is quite extravagant. Why should I spend Sh5,000 on a baby shower?” she wonders,

Avoiding unnecessary events are some of the changes she is planning to make after Covid-19, in addition to carrying lunch to the office, eating out once a week, and cancelling her gym subscription, which she admits she never really used.

For many people, the biggest financial lesson from this pandemic is the importance of setting aside cash for emergencies and increasing their savings.

But Irene believes savings will not help someone during a crisis of this magnitude.

“My neighbours recently moved out to a cheaper house after spending all their savings. What we really need is a positive attitude, and peace of mind. When you have these two, you can think clearly and be ready to take the needed action. Be it moving back home or selling your car. Don't fear to start over afresh because this will make you anxious and stressed,” she says.

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