Money Talks: Budgeting tips for a woman in her 30s

This is the second of a three-part series that explores the personal budgets of three different Kenyans. We are looking at the budgets in great detail; I will point out what works and share tips on how individuals can make smarter money moves.

To even out the playing ground, I have used the same budget lines for each of the budgets under scrutiny. I edited the budgets these individuals shared with me to fit into these budget lines. 

Today we look at the budget of a lady we will call Jackie.

Profile of Jackie

Age: 32 years, female

Relationship status: Married for three years. No kids

Employment status: Salaried on permanent terms, with medical cover and retirement benefits

Obligations: No kids. Her Dad is a widower and lives up-country with their last-born brother. Her three other sisters are all on steady incomes

Jackie’s monthly budget

Income                    

- Salary: Sh120,000 

- Business income: Sh20,000 

- Investment income: Sh2,000 

TOTAL INCOME: Sh142,000 

Expenditure            

Rent: Nil  

Loan repayment: Sh22,000

Emergency fund: Nil - 

Cash savings (Bank): Sh5,000

Cash savings (MMF): Sh10,000

Sacco savings: Sh7,000

Chama savings: Sh5,000

Retirement policies: Sh8,000

Education policies: Nil  

Other investments: Sh8,000

Parents/siblings: Sh8,000

Grocery shopping: Sh10,000

Mama mboga shopping: Sh8,000

Utility bills (Water, electricity): Nil 

Internet: Nil  

Fuel: Sh8,000

Personal development: Sh10,000

Personal shopping and grooming: Sh10,000

Personal entertainment: Sh10,000

Family entertainment & holidays: Nil 

NET EXPENSES: Sh129,000

CASH FLOW: Sh13,000

How Jackie budgets and spends her money

• Jackie earns a total monthly income of Sh142,000. She didn’t get here by chance – Jackie says she took active steps in the last five years to increase her income streams, particularly her salary.

She says, “I got a salary increment earlier this year. My net salary in 2019 was Sh70,000. My mentor had advised me to set myself apart in the market and sit professional courses. I made the sacrifice, saved, paid for international exams and passed. 

“Getting the certifications got me the salary increment. I used my increment to take a Sacco loan for business. I also invested in government bonds.”

• Jackie bought three motorbikes that she leases out for a net monthly income of Sh20,000. She pays excess on her loan every month because she wants to clear it quickly and move on to other projects.
• Because she is married to a financially secure man with ambitious goals, Jackie can save and invest most of her money. She is happy with how her finances are maturing.
• Jackie only became serious with her budgeting when she realized that she was running out of money before the end of the month. Also because her husband is strict with his budgeting, this good habit rubbed off on her. 

What Jackie is doing right

Looking at Jackie’s budget and hearing about her relationship with her money, here is what Jackie is doing right:

• Jackie has diversified her savings. By sending Sh17,000 to her Sacco and MMF (Money market fund), Jackie is making extra money without expending any extra effort. The interest income from the MMF and dividend income from her Sacco is a form of passive income.
• Jackie is saving to her retirement policy. She has a retirement benefit from her employer but she is going the extra mile to take Sh8,000 to that personal policy every month.
• As Jackie mentioned, she has seen firsthand the benefits of investing in herself to get an edge in her career. She says, “I will keep saving and keep my eyes open to opportunities that will grow me and grow my salary.”

Smart money moves Jackie can make

• Jackie is not building her emergency funds nest. She should have six to nine months of living expenses saved in there. Her living expenses are currently Sh129,000. So she should have between Sh774,000 to Sh1.1million in her emergency fund. A smart move would be to review her expenditure and redirect some money to that budget line.
• Jackie has a positive cash flow. That’s good. That means she makes enough to do what she needs to and wants to. The problem, though, is that she has too much idle cash left in her account at the end of the month. And it piles up month after month. Jackie should think of ways to spend this money: either expense it, save it or invest it. I propose she starts saving to invest in another motorbike.

• Jackie is married but from her budget – and from what she tells me – she doesn’t have any joint investment projects with her husband. Marriage is not just a union of two people, but a union of finances. The power of two: Jackie and her husband can achieve great goals if they merge their finances. 

My suggestion when couples are financing joint investment projects is to allocate the financing on a 50-50 basis. Or proportionally to the earning power of each individual. So consider, say, a 30-70 basis, with the larger portion going to whoever has a more positive cash flow. 

Do you have questions for the writer? Email to [email protected]