Pension savings

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I earn Sh45,000, save Sh500, and want to own a plot. Where do I start?

What you need to know:

  • Each month, Saturday Magazine will feature a reader’s money challenge. The reader will give us an honest breakdown of their finances, and our experts will give easy tips on exactly how to tackle their money issue or goal. So, gather your favourite drink, take a seat, and let’s talk about money
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Here is this month's 'Money question of the month'

My name is Denise Achieng'. I am 31, a single woman with no children yet. I live in Ruiru and work as a HR assistant in Nairobi CBD. I earn a monthly net salary of Sh45,000. I regret taking a two-year loan of Sh200,000 in January 2020 to start a side hustle boutique that collapsed after six months. I would like to pay off the loan quickly and save at least Sh400,000 so that I can acquire a small plot in Kamulu in the next two years. How can I achieve this?

My current breakdown of monthly expenses:













Sacco Loan














Total expenses




Expert's advice 

Robert Ochieng', Investment and Financial advisor at Abojani Investments

Robert Ochieng

Robert Ochieng’, an investment and financial adviser at Abojani Investments.

Photo credit: Pool

I commend you for using less than 20 per cent of your net salary on rent. That is below the advised levels of 25 per cent. The problem with your money lies in your savings. You are currently saving only about 1 per cent of your net pay. You should be saving at least 10 per cent but for true financial freedom within 10-15 years, you should strive to save at least 20 per cent of your net pay or more. You should save and invest at least Sh4,500 per month. Check your expenses on clothes and beauty—Sh5,000 is a lot of money to spend on this. While I don't suggest you dress like a nun, your income doesn't allow you to keep up with every fashion trend. It's financially draining. Reduce the cost of food, especially now that you are alone.

Should you start a family, this expense will double and you will border on a financial cliff. You can save by carrying packed lunch to work. Beauty and food savings will bring your savings to Sh4,000. Since you save with a Sacco, your target should be to save Sh150,000 so that you can be eligible for a facility that is three times the amount you have saved. Within two years, your Sh4,500 monthly savings will give you access to a facility of between Sh324,000 (three times your savings). By then, you would have paid off 16 months out of your 24-month Sacco loan. Once you conclude paying off this loan, channel the extra money you have been using for loan repayment to your savings. This will give you an extra Sh9,000 every month, and you will be able to get a loan to purchase the land you desire.


Chacha Nyaigoti Bichang'a, personal finance coach at financial consultancy firm, Chachanomics Limited

Chacha Nyaigoti Bichang’a, personal finance coach at financial consultancy firm, Chachanomics Limited. PHOTO|POOL

Your monthly savings of Sh500 is too insignificant. It translates to just 1.1 per cent of your net salary which is far below the bare minimum of 10 per cent. This means that you don't have an emergency fund equivalent to 3 to 6 months of your gross salary. You need to stop saving after spending. To achieve your Sh400,000 saving challenge, you need to start by reducing meals and transport budget by Sh4,000. This is doable through shopping for foodstuff in bulk, carrying packed lunch to work, avoiding unbudgeted eat-outs, and traveling during off-peak hours. Use the extra Sh4,000 you get from these cuts to top up your loan repayments so that your repayments are Sh13,000 instead of Sh9,000. The extra Sh4,000 should go to your principal repayment. This method can save you nearly five months of repayments on a two-year loan of Sh200,000. Once the loan is settled, save Sh13,000 for 31 months. You'll have about Sh403,000 and be debt-free. This amount can be higher if invested in a fund that compounds interest such as a Money Market Fund. Saving it in a Sacco will also earn you dividends and allow you to access up to Sh1.2 million in loan. Be careful about bad debt, now that you're paying off a loan for a collapsed business. Always do your due diligence before taking and using loans. When you get to your goal, evaluate if it is viable to buy the plot or not and whether there are more viable investment options in the market. Two years is a long time and market and investment dynamics are changing daily.


Stella Chepng'eno, personal finance coach and certified corporate trainer, Eagle Tact Consultants

Stella Chepng’eno, a personal finance coach and certified corporate trainer, Eagle Tact Consultants. 

Photo credit: Pool

A breakdown of your monthly spending shows that you spend Sh21,450 on your on-time expenses. This is 48 per cent of your net income. You spend Sh14,050 or 31 per cent of your net income on daily expenses, 1 per cent on savings, and 20 per cent on loans and liabilities. Your total expenses are too high. Total expenses excluding savings and loans take up 79 per cent of your net income. Cut the expenses. You can start with clothing, food, and rent which cost you Sh20,000. To shave off money from these, consider moving to a more affordable area that will not grievously affect your transport costs. Moving to a Sh6,000 rental house will save you an extra Sh2,000. Packed lunch from home will save you an extra Sh4,200 per month. Once you start cutting costs, you will need to set up an emergency fund and raise your monthly loan repayments to get out of debt faster. You also need to do an audit of your time and skills. What can you do to earn extra money? This should be something that will not cost you a lot of money to start. It shouldn't take away your work time either. You don't want a repeat of your collapsed side hustle whose funding you're now repaying.

If you have a money problem you want to be fixed, send us an email using the addresses below.


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