If you are earning Ksh 150,000 in Kenya, you will be tempted to spend it carelessly and regret later. However, there are better ways to spend this money
A net salary of Ksh 150,000 is a lot, it can do a lot of projects.
Here is how to spend the money wisely:
Look for a cheap house where rent does not go beyond Ksh 30,000. If you are not married. Rent a house where you’ll be paying Ksh 15,000 to Ksh 20,000 rent. If possible, a one-bedroom house will be ideal.
One mistake people make in Nairobi is that they spend more than half of their income on rent. You find someone earning Ksh 150,000 going to rent a house in Kilimani or Kileleshwa where he is paying Ksh 70,000 monthly—which is wrong.
You should also budget well for bills. Major bills include: water, electricity, food, clothing and shopping. School fee and transport are also included.
Water—Ksh 3,000
Electricity—Ksh 2,000
Transport—Ksh 15,000
Food—Ksh 10,000
Shopping—Ksh 10,000
Education, Insurance and hospital bills—Ksh 20,000
Total amount will be Ksh 40,000 to Ksh 50,000
Your total expenses in a month will be Ksh 80,000 to Ksh 90,000.
You will remain with Ksh 50,000 to Ksh 60,000 to save and invest.
If I were the one with Ksh 60,000 to invest, I will join a Sacco and also open a Money Market Fund account. I will be saving Ksh 20,000 monthly in a Sacco and Ksh 40,000 in Money Market Fund.
The money in Money Market Fund will yield 13% to 18% interest rate per year. In a year, the MMF account will have over Ksh 450,000. This means that I will earn interest of Ksh 40,000 and above in my first year from the Money Market Fund.
My savings in the Sacco will also yield dividends. In a year, I will earn dividends of Ksh 25,000 and above from the Sacco.
If I invest the money consistently for 3 years, my total investment will be over Ksh 3 million. I will also be earning over Ksh 500,000 monthly as interest and dividends.
The Ksh 60,000 is enough to start a business that will bring extra income. With annual savings of Ksh 500,000 in Money Market Fund, you will start a Chemist, fast food restaurant or executive salon & kinyozi. If well managed, the business will generate over Ksh 20,000 monthly.
The Sacco will be able to loan you money to build a house. In 3 years, your savings in a Sacco will be Ksh 600,000 to Ksh 1 million. You are eligible for a loan of up to Ksh 4 million.
Ksh 4 million will buy land and build a 3-bedroom house.
After moving in to your house, you will be saving Ksh 30,000 that you were paying rent with.
Avoid destructive habits like betting, alcohol and having many girlfriends. These 3 things will make you broke.
Gambling is one of the habits that will completely make you broke.
You will be tempted to own a car, don’t buy a fuel guzzler. Buy a car with 1,000 to 2,000 CC that will be efficient in fuel consumption. Avoid buying a car on loan because you might struggle to repay.
A car is a liability and not an asset.
