Help! I earn Sh60,000 monthly, but spend all on relatives and girlfriend

My name is Stanley Masika. I graduated recently from a local medical college as a nurse. I have a practicing license from NCK. I am not formerly employed but I have been working on a locum basis. I make Sh2, 000 daily but I am not able to save any money. I pay Sh11,200 house rent, Sh1,500 DSTv, Sh. 3,000 for my university student cousin’ s rent, Sh8,000 fee and transport for my cousin who’s doing a short course, Sh1,000 for electricity, family giveaways Sh5,000 monthly, transport Sh3,000, food Sh6,500. My girlfriend recently moved in with me and as a result, I have been supporting her sister who is at a nearby school with food and personal effects of Sh2,500 monthly, house wifi Sh1,000, and miscellaneous Sh6,000. My family thinks I get too much money and so the financial requests keep inflating. I am struggling. How do I manage my money better? What do I need to do?

Chacha Nyaigoti Bichang’a, a financial coach at Chachanomics Consulting Firm and the author of Mastering Your Money

You are currently living beyond your means. Your expenditure is emotionally determined by both internal (personal desires or wants) and external influences (by family and girlfriend). This impressionistic lifestyle makes it hard for you to save. Your total expenditure is Sh48,700 which means that you are left with Sh11,300 disposable income that could be channeled to a savings account for emergency, or investment. Maybe due to poor financial planning and lack of proper financial records, this money cannot be accounted for either. To remedy your situation, you need to do the following:

1.  Cut down on your expenses as below:

a) Rent: Your expenditure on rent is over 20 percent of your total income. Trim it to a maximum of Sh8,000 and save around Sh3,200. 

b) Family giveaways: Cut it down to Sh2,500. This is a type C expenditure which is unnecessary or not very essential. 

c) Lunch: Start carrying packed lunch from home and save about Sh1,500. This will save you both time and money. 

d) Transport: Reduce this from Sh3,000 to around Sh1,500 by travelling during off peak hours.

e) Girlfriend and cousins: Stop funding your girlfriend's sister's school fees and reduce expenses on your cousin's short course. Instead of putting up with your girlfriend who has introduced another burden, you could have opted to stay with your cousin till he completes the short course. This would have made you save on rent and meals. Still, you can share your cousin's education expenses by teaming up with your uncles or other cousins. You shouldn't be the only one footing the bill.

f) Food: Learn to buy foodstuffs and other household items in bulk. This will enable you to save a significant amount of money.

g) Miscellaneous expenses: Reduce the Sh6,000 by half and channel Sh3,000 to a savings and investment account.

2. Acquire personal financial skills

You need to learn about the importance of financial planning, budgeting, tracking your money, setting financial goals, debt management, saving and investing. Budget your money using the 50/20/30 rule, reduce wastage, save and invest more. You will learn the difference between needs and wants, good expenses and bad expenses. You will ultimately become not only financially disciplined but also a wise spender. 

3. Have a candid talk with family members

Hold an honest discussion with your cousins, girlfriend and other family members. Tell them that you have set up some financial goals which you need to achieve this year like enrolling for further education, saving to buy a plot and building a house. Even if they don't understand, go ahead and cut down on money given to them.

4. Get a medical cover

Because you're not formally employed, you need to apply for NHIF, which is more affordable than the other private insurance. 

5. Open a savings account

Once you reduce your expenses, you will be able to save around Sh20,000 which can be split as follows: Sh10,000 should be deposited or saved every month with a reputable Sacco, Sh10,000 channeled to an emergency fund account with Money Market Fund, and Sh3,000 set aside for irregular expenses such as donations, social welfare or any unplanned expenditure.

Stella Chepng’eno, personal finance coach and certified corporate trainer

An analysis of your income reveals that your money is allocated as follows:

From this expenditure, you are left with about Sh11,300, if you work the full 30 days in a month. You need to massively cut these expenditures.

Start by prioritising paying yourself and saving money in an interest accumulating vehicle such as the Money Market Fund or Sacco. These savings should be driven by a goal. What do you want to achieve this year? Do you want to buy a plot for instance? How much will it be and how much do you need to save every month. 

Since you are already working on one locum, find ways to work on additional locums, especially since your profession can allow you to work at different places at different shifts. This will increase your revenue base. 

On your girlfriend spending, decide if she is someone you want to start a family with, and if she is willing to start bringing income on the table to cater for some of the bills. It is also important to know why the girlfriend’s sister’s family cannot foot her school bills such that you have to come into the picture. 

Be candid with your relatives too about the struggles you are going through and why you are unable to pay off your cousins' bills alone. Since you just started working, move to a more affordable house of around at least Sh8,000. This will boost your savings to Sh14,500. Out of your miscellaneous, where does this money go? Can you convert and invest it as an emergency fund? If the money is not an absolute must-spend, your savings kitty will go up to Sh20,500. Use the Sh500 to apply for health insurance under the NHIF. 

The remaining Sh20,000 should be invested in a Money Market Fund or Sacco where it will earn interest.

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