My wife and I earn Sh70,000 combined net. We don’t know how to budget. What do I do to earn more?

My name is Fredrick. I am in a dilemma. I am married with three kids. Both my wife and I are employed. She has a net salary of Sh38,000 and I have a net salary of Sh34,000. We haven't been spending wisely. We hardly save and do not have funds for a rainy day. We don't have a spending budget and leave day by day, spending after spending. That I also earn less than my wife is challenging my position in the family because of my role as the man. I am now considering quitting my job to start a business. I envision that I would run a business worth Sh 500,000 start-up capital. Is this wise? What business can I start with? How do we budget for the money we earn with three kids living in Nairobi?

Rhina Namsia, the founder of The Acemt Consulting, a training and consultation company that provides financial planning and investment advisory

The success of the solution for your household’s money problem is in the mutual openness and accountability between yourself and your wife. You need to be on the same page on this. You need to have a budget that can work with your household earnings. Not only does a budget help you keep track of where your money is going, but it gives you more control over the process. 

Before picking a budgeting method, figure out where your money is going. Easy way is to collect your receipts for a month or two for every coin you spend and compile your MPesa and bank statements to view your in and out transactions. Sort the receipts into piles for food, gas, utilities, entertainment, school fees, bus fare etc. to get a good picture of your current spending and provide opportunities to find ways to adjust and save.

Having never done a budget before, I would recommend a zero-based-budgeting method which help in tracking consistent income and expenses. This concept is simple; income minus expenses equal zero. However, it may not be optimal to enable you set aside savings, combine it with the pay-yourself-first budget method. This prioritises saving, debt repayment and investment in your budget. To have a zero-based budget and include goal-based saving as one of your expenses, you’ll need to formulate specific goals for yourself, your wife, and your household.

A good example is having an emergency fund for a rainy day, home purchase, or even school fees. Once you decide on the goals, pick out the best vehicle to achieve them. For instance, use one money market fund account for emergency funds, another one for school fees, and so forth. Budgeting in Nairobi is not easy but focus on housing, kid’s school, and cost of living in. With three children, Sh20,000 can find you a good two bedroom in the outskirts of Nairobi. Choose a place close to school and affordable cost of living and housing for your budget.

Be guided by the 50/30/20 rule where 50 percent of Sh72,000 goes to basic needs, 30 percent to wants and 20 percent to savings and investments. This means Sh36,000 caters for rent and house utilities, Sh21,600 for things like school fees, entertainment, clothing and Sh14,400 for savings. Break down the Sh14,400 to Sacco savings, and emergency funds savings.

Taking a loan of Sh500,000 for a business you have no idea about is risky. A business does not guarantee returns especially in the first three to five years, worse if it’s totally a new venture to you. Pick something in your line of work or what you are passionate about. You can get a loan against your payslips for not more than Sh100,000. The other option is to join a good Sacco and start saving Sh5,000 per month and get a loan for your business after a while. But do not quit your job to start your business, start it on the side and let it grow first. Better still, you may both explore consultancy which requires very minimal startup and operational capital.

Cut the guilt of feeling bad about earning less than your wife. It is only Sh4,000 which I believe is not so significant to warrant such insecurities. What you believe is who you become. If your wife is so vocal about it, then maybe this is something else and not a money problem, and if it persists, you might need to seek family counseling.

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