My name is Clarence. I am in my early 30s and the father of a two-year-old boy. I grew up on a half-acre farm. I am the eldest and only child in a family of six, with two unemployed, low-income parents.
I earn Sh79,000 after statutory deductions. I have taken a bank loan of Sh1.5 million to be repaid by November 2026. The monthly installment of this loan is Sh28,366.
This has been the only deduction from my salary since October 2019. In addition, I have an outstanding mobile phone loan of Sh30,000 that has not been repaid for a year and a half now.
My biggest headache is my stalled house project which needs Sh500,000 to furnish as I don’t have a house to live in now. I send Sh10,000 to my girlfriend every month for maintenance. My son will start nursery next year and my twin sisters will start secondary school. My other twin sisters were supposed to start university but took a leave of absence due to financial reasons.
My four sisters’ annual tuition fees are about Sh360,000. My son’s education will cost Sh36,000 per year. My friend works as a primary school teacher earning Sh17,500 per month, which is not enough to pay rent and maintenance.
I am 30 years old and have no tangible assets except an unfinished house – no savings and no investments. I live hand to mouth year after year and have been in this predicament for about six years. Please help me manage the 51,000 shillings I keep in my pocket every month.
Emmanuel Mbogoli, Founder of PlanWise LLC, a consulting firm that educates, strategizes, and guides clients toward success.
It’s understandable that balancing your many responsibilities and financial challenges can be daunting. However, you can turn your situation around by focusing on practical steps that will help you get back on track and build a more stable future.
To be able to realistically achieve this, you need to distinguish between your immediate priorities and deferred goals that you can work towards once you achieve a level of financial control.
From what I have shared, I would say that paying off your debts needs to be addressed first.
Secondly, you need to make sure that your family’s basic expenses such as housing, education, and basic expenses are met. Once these needs are met, you can move on to other financial goals.
As for your postponed goals, you may need to postpone unnecessary home furnishings for the time being, because the most important thing is to complete your home.
Additionally, as commendable as it is that you want to support your sisters, I highly recommend that you consider possible alternatives such as scholarships, work-study programs, or other financial aid options available for their education.
Not only will this give you the breathing space you so desperately need, but in the long run it will also help you manage your family’s current level of dependence on your personal finances.
Now let’s get into the details of your business plan. First, you need to create a budget. I suggest you start with a zero-based budget since you have multiple financial commitments.
This requires you to allocate every shilling of your income to specific expenses or goals. Start by categorizing your spending into emergency funds, basic living expenses, fixed expenses, debt repayment, savings and investments.
Start by setting aside a small amount, such as 5,000 shillings, for an emergency fund to help cover any unplanned expenses in the future such as illness, loss of income or even serious illness in your immediate or extended family.
Make sure you have at least three to six months’ worth of your basic expenses saved. It’s best to put this money in a money market fund, where it will earn a good return on interest but will not be easily accessible until you need it.
Since your bank loan of Sh28,366 is deducted in advance, this leaves you with Sh45,634.
The next step is to allocate spending to basic living expenses such as parental support, household expenses, utilities and groceries. A monthly spending of 15,000 shillings should be enough to cover this, leaving you with a balance of 30,634 shillings.
Given your friend’s fixed monthly allowance of Sh10,000, you will now have Sh20,634 left, and you can start setting aside an additional Sh3,000 per month for your son’s school fees.
Of the remaining Sh17,634, I suggest you set aside Sh12,000 to aggressively pay off your debts, starting with a mobile loan given the high interest rates charged on digital loans.
At this point, you have a disposable income of Sh5,634 left, which you can allocate to build an investment portfolio that will help you meet future financial needs such as further education for your child, build passive income such as starting a business, or even start saving for retirement.
Direct this remaining income into a medium to long-term savings instrument, such as an insurance savings policy or an education policy, or even structure it to allow you to invest in good-yielding instruments such as treasury bills or government bonds. You can also save it through a savings fund.
Once your debts are paid off, you can use the increased income to complete your home or even invest in other investments such as real estate.
While you’re working on this, also explore additional sources of income such as part-time work or side hustles that can supplement your income and help you speed up your debt repayment and free up more money to work for you.
Focus on developing your skills or hobbies and turning them into income-generating activities. You can also invest in professional development that may lead to better-paying job opportunities in the future.
With an allowance of 10,000 shillings, your girlfriend now has 27,500 shillings per month. Since you are both already financially and emotionally invested, sit down together and develop a plan to budget and save for this money the same way you would if your relationship evolved into marriage.
While your sisters wait to go to college, have them explore sponsorship possibilities offered through higher education boards, community development funds, provincial education funds, and individual school programs.
Remember to keep track of all your expenses and income, as well as review and adjust your budget at the end of each month based on actual spending and any changes in circumstances.
If unexpected expenses arise or if there is a change in income, adjust the budget accordingly, always making sure that every shilling is counted and allocated for a purpose. It is important to stay focused on these practical steps while being patient with yourself.
Financial stability doesn’t happen overnight, but with a structured plan like this and persistence, you can make great progress. Take one step at a time and you’ll start to see progress.
If you have any financial issues, email us at (email protected) and leave your contact number. Financial questions will be answered in this column.