Money talks: Yes, wage-earners can save money

Consider this scenario: You are earning an income from your job but you’re not paid at the end of every month. Instead, you’re paid wages in cash and paid daily – you’re paid at the end of your workday, as you clock out of your shift.

Being a wage-earner is a different kettle of fish from being a salary-earner. A wage-earner needs more discipline and structure than someone who is on a month-end salary because of the idea that ‘I always have money in my pocket.’

Always having money in your pocket can give you a false sense of assurance and security about the health of your personal finances.

Beyond that, cash in your hands is always itching to be spent and spent quickly, it can become difficult to save and invest when you constantly respond to this itch.

As a wage-earner, we need to create for you a simple and clear money management system that still grants you assurance and security by meeting your goals to save and invest, while leaving you enough money to address your daily expenses.

Here’s how:

Fix your eyes on your monthly budget: You must be clear on how much exactly your monthly basic living expenses are. That is, your rent, monthly food shopping, water, electricity and internet, perhaps school fees and loan repayments. You must also have a budget for saving and investing.

Have these figures at the tip of your fingers.

For the sake of this story, let’s say your basic monthly expenses total to Sh60,000, and your savings and investments is Sh24,000.

Thus a total of Sh84,000 per month. Crunching the numbers then… As a wage-earner, you must set aside a minimum every single day of Sh2,800: Sh2,000 for your expenses and Sh800 is for your savings and investments.

Lock this money away: Lock this Sh2,800 daily, lock it far away from your itchy fingers.

How? Open a lock savings account for your expenses.

A lock savings account is an account where you put your money in and ‘lock’ it until a certain date. You cannot withdraw this money until the unlock date is upon us.

You can open a lock account in the money-transfer app of your mobile phone or with an independent app.

Save Sh2,000 to your lock savings account every day, this is for your basic expenses. You must put away this Sh2,000 no matter. Don’t tell yourself that you’ll put Sh4,000 after every two days or Sh14,000 at the end of every week. Forget these empty promises.

 You’re more likely to save a smaller amount every single day than you are to save a bigger amount after every few days.

Set the unlock date to a day before your rent and other basic living expenses are due next month. Example: You open today, on March 15, 2023. Set the unlock date to April 3, 2023.

Save and invest every day as well, but to other products out there. Example: Save Sh400 to your money market fund and Sh400 to your Sacco.

Set the money aside immediately you’re paid: The best time to set your money aside to your lock account and to your savings and investments is immediately you’re paid. I cannot emphasise this enough. Master the discipline to mature this habit.

Once you’ve set your Sh2,800 aside, you reward yourself with the peace of mind and security to spend what’s left with more freedom.

I hear you asking, ‘What if I don’t make enough money from my wages to cover both my expenses and investments?’

Well, for now, focus on managing your basic expenses and invest as much as you can. Have a plan to increase your wages so you can have money at your disposal.

Also have a plan for your passive income: Being a wage-earner is a precarious way to live because life happens – death, disease and a thousand other unforeseen life things may get in the way of you earning your daily bread.

Have a plan to supplement your wages with a steady stream of passive income. For example, being a partner in a profitable business.

Read: Is it wrong if I ask for a pay raise?

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Florence Bett-Kinyatti is a certified accountant and former financial auditor.