I am 26 and earn Sh19,000, how do I save in preparation for a wife and children in my 30s?


Unlike traditional banks, saccos are owned and governed by their respective members.

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My name is Kelvin. I am 26. I earn Sh19,000 per month, net.

I don’t have a family yet. So far I don’t know how to budget and don’t have any savings but I would like to save and invest part of this salary.

I have been hearing about unit trusts, shares, real estate and T-Bills and bonds but I have no clue what they are.

How can I start making money from these with my small earnings?

I would like to prepare for my 30s when I will probably have more financial responsibilities, including a wife and children.

Emmanuel Mbogholi is a Partner at SFAI Kenya

Achieving financial freedom is not only a factor of how much money you make but also how you manage what you have.

Start by tracking your income and expenses. You can download a spending tracker on your smart phone to help you record your purchases. Once you know where your money goes, draft a budget.

Cut unnecessary spending to free up money for savings and investments. Spend only on what is essential and avoid impulse buying.

Apply the 75:15:10 budgeting method where you spend 75 per cent of your income (Sh14,250), direct 15 per cent (Sh2,850) to investments and 10 per cent (Sh1,900) to savings.

Before you start investing, set up an emergency fund which will act as a safety net against unforeseen expenses. Aim to save at least six months of living expenses to begin with, then increase this with time to at least 12 months of living expenses. Put the money in a regulated Money Market Fund where it will earn you a decent interest. Having your emergency fund in a place where it is not easily accessible will help you stay disciplined. If possible, set a standing order to ensure you never forget to put aside the funds.

Since you are new to investing, start by building your savings. You can do this via a reputable Sacco where your money will earn dividends. Upon reaching a target of say Sh50,000, you can opt to invest in instruments such as treasury bills which are short-term, so you can use this saving fund to plan for medium-term goals such as purchasing a plot of land or starting a business. You will need to open a Central Depository and Settlement Corporation (CDSC account) to trade in this type of investments. You can do this directly with the Central Bank of Kenya. After building your savings account, you can now invest in other financial instruments such as bonds. Government issued bonds are deemed secure and offer a decent return, and you need to have at least Sh100,000. Bonds are long term investments and so you should use this for capital intensive goals such as purchasing or building a home.

You also need to start saving for your retirement. If you have an employer-funded pension scheme, contribute the maximum allowable amount, or register for an individual pension plan with a regulated pension scheme provider. 

Once you have established the above financial practices, you can begin to work on increasing your earning capacity. Review your skills and consider expanding your knowledge so you can be more valuable at work. Consider starting a business based on your current skills if you have the time. Identify gaps in the market which you can fulfill in return for a profit. Equip yourself with the right skills before setting up. You can take a short course on entrepreneurship to help you in this journey.

Another way to earn extra income is through online work such as social media management and digital marketing. You can review jobs available based on your skills and purpose to acquire the skills that are in demand through investing in short courses. Within your age bracket, there are many part time hustles that you can get into over the weekends or during evenings such as car washing or online writing. Additional skills and hustles are what will increase your income.

Above all, focus on starting small, staying disciplined, and gradually increasing your investments as your income grows. This will help you prepare for your 30s and beyond. Focus on financial stability before you can consider adding more financial responsibilities such as family.

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