How do I save enough to buy a plot and put up a house in Syokimau?

What you need to know:

  • I end up spending all my extra money, sometimes on things I really don’t need.

My name is Patrick. I earn a net salary of Sh130,000. I get an allowance of car mileage of Sh30,000 that is paid separately.

My expenses include; car loan Sh60,000 ending May 2024 (Balance Sh947,000), rent Sh25,000, transport Sh10,000, parents Sh10,000, shopping Sh10,000, internet subscription Sh2,500, water and electricity Sh5,000.

I end up spending all my extra money, sometimes on things I really don’t need.

How can I start saving for my future? I would like to build a house in my rural area and also find a space around Syokimau Nairobi where I can put up my house so that I stop renting.

Sometimes I get photography gigs but I end up using all the money.

Please help.

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

Your total income is Sh160,000. Your total expenditure is Sh122,500 and a whopping Sh37,500 is unaccounted for.

This points to a bigger underlying problem of financial wastage and mismanagement. Your car is regrettably your biggest liability consuming Sh70,000 (37.5 percent of your income).

Focus on these three main strategies to get a handle on your money:

1). Reduce your expenditure as follows:

i) Rent:  Cut it down to around Sh17,000 and save Sh8,000.

ii) Transport: Reduce it by half and save Sh5,000. Monetise your car to generate additional cash flow such as car-pooling, doing car-boot sales, or enrolling in part-time taxi hailing. This will shift your debt-laden car from a liability to a profitable asset.

iii) Parents: Hold a candid conversation with your parents and reduce the money sent to them by half and save Sh5,000. 

iv) Utilities: Cut down on enormous consumption of water and electricity by Sh2,500 and save Sh2,500.

You will remain with a disposable income of Sh20,500. With the undocumented Sh37,500, you will have a disposable income of Sh58,000.

2). For one year, channel Sh10,000 to a money market fund (MMF) earning at least 9 percent compound interest per annum which will give you Sh120,900, send Sh10,500 to a Sacco making it Sh126,000.

Increase car loan repayment by Sh30,000. It will take you about ten and half months (by August 2023) to clear your loan instead of 18 months (by May 2024).

In September 2023, once the loan is cleared you will remain with a surplus of Sh90,000, boost your saving in MMF by Sh18,000 (20 percent) making it Sh28,000 a month, and increase your Sacco deposits by Sh45,000 (50 percent) making it Sh55,500 and Sh9,000 (10 percent) to boost your photography gig. You will already have saved Sh126,000 at this time. 

Over the next 24 months, your total Sacco savings will amount to Sh1,458,000 (minus dividends of 10 per cent peryear).

Using the 3X multiplier, you will qualify for a loan of Sh4,374,000 by September 2025 which you can use to buy a plot and build a house or buy one off-plan home.

By this time too, your MMF will have compounded to Sh845,000. Without taking a loan, your savings will amount to nearly Sh2.5 million.

With such possibilities, it would be better to redirect the money to a project that will earn you money and still give you the satisfaction of homeownership in Syokimau or Kitengela such as rental units. Aim to earn passive income from rental units.

3). Invest the remaining balance of your disposable income of Sh7,500 from the budget cuts to improve your photography skills. This amount, together with the money you make from your gigs should be used in the periodic acquisition of better equipment.

I earn Sh160,000 net but I am always broke by the 5th of every month. Photo | Photosearch

I earn Sh160,000 net but I am always broke by the 5th of every month

My name is Gloria. I am a single mom of two children (seven and one). I live in Nyandarua and earn a net salary of Sh160,000. My expenses are as follows; 

Loan: Sh50,000, Sacco: Sh5,000, Chama: Sh15,000

Mom: Sh5,000, Shopping: Sh15,000, Rent: Sh8,000, Househelp: Sh8,000, Education policy: Sh10,000, Fees: Sh25,000 per term 

The rest disappears into miscellaneous expenses. Despite what I earn, I am always broke by the 5th of the month. Kindly advise what to do to have an investment plan for example property.

Benjamin Cheruiyot - the Engagement Lead at Abojani Investments, a personal finance and investments advisory firm

Your school fees budget is estimated at Sh10,000 per month. Total monthly spending is Sh126,000. This leaves out Sh34,000 unaccounted for.

With such a figure unaccounted for and going broke by the 5th of every month, it is possible you spend on a frivolity of wants, and entertainment, or are ensnared in mobile loans.

Your savings total Sh20,000 (SACCO Sh5,000 & chama Sh15,000). This is 12.5 percent of your net salary which is low considering the huge disposable income you enjoy.

At best, you should aim at 20 percent of your net salary towards savings and investments. 

The Sh34,000 lost in your budget can help you increase SACCO deposits to Sh10,000 and introduce savings of Sh7,000 to a money market fund account to achieve the 20 percent rate.

MMFs earn fair interest rates, are quite liquid and easily accessible, thus a great emergency fund vehicle. Once you have set up automatic deductions to these accounts, you can allocate the rest to needs and justifiable wants.

Your rent expense is only 5 percent of your net pay. That is a very fortunate situation which should propel you to take greater advantage to achieve financial freedom and possibly eliminate the expense in the near future.

Your wish to own property can be afforded by your savings. If you had Sh 700,000 in your SACCO savings, using a 3X multiplier formula can grant you a Sh2 million loan that can finance the purchase of a plot or arable land upcountry.

This will cost you nearly Sh50,000 monthly for 60 months. Paying off your current loan will help you finance a new one.

If you increased the SACCO savings to Sh10,000, you'd have Sh131,000 inclusive of net earnings of about 10 percent interest on deposits after a year. This consistency will compound to Sh700,000 in five years.

Cut down on shopping by buying in bulk will save you Sh5,000 monthly, which you can use to top up your Sacco savings. Savings of Sh7,000 in a money market account will amount to Sh90,000 annually, inclusive of net earnings of nine percent per annum.

In five years, your account should hold nearly Sh500,000. This will amount to savings of Sh1.2 million. This money can also give you passive gains from government bonds where you invest a minimum of Sh50,000 in a Treasury bond or Sh100,000 in an infrastructure bond (IFB).

The returns for IFBs have risen to 13.7 percent annually from 12 percent since 2020. For instance, investing Sh1 million in an infrastructure bond will earn you Sh68,500 every six months for a specified tenor of 15 or 20 years.

You save Sh15,000 in a Chama; what’s the purpose of this Chama? How much have you saved and how much interest is your money earning? If you wanted a loan to purchase a plot, would you get in at a lesser interest rate? If your answers is NO, consider redirecting the money to your Sacco.

This would take your savings to Sh25,000 per month or Sh300,000 per year. If you save consistently for three years, you will have Sh900,000 eligible for a 3X multiplier loan of Sh2.7 million which you can use to kick start your home project.

Some Saccos have housing funds to help members achieve their goals of building or buying homes. A handful of Saccos have also gotten funding from the government through the Kenya Mortgage Refinance Company to offer mortgages under the affordable housing plan. Talk to your Sacco to explore these goals.


If you have any money problems, send us an email via [email protected] and leave your number for contact. Money questions will be answered on this page.


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