Help! I have a Sh50,000 job, don’t pay rent and have nothing to show for it

I haven’t paid rent since August 2021, and I haven’t received any payments. I live alone in my sister’s house. Job opportunities are scarce and sometimes I go more than two months without work.

In March, I got a short-term contract with a salary of 35,000 shillings. I worked for two months. In June, I got another job with a salary of 34,000 shillings for one month. In July, I had no job. In August, I got a job with a salary of 50,000 shillings. Out of that, I was receiving a daily allowance of 1,000 shillings.

After one month, I got a total of 25,000 shillings as daily allowance. I managed to save 5,300 shillings from my daily allowance of 1,000 shillings. We travel a lot and out of the 1,000 shillings per day, I take about 500 shillings to get a decent hostel without bed bugs, then about 200 shillings for food. The rest is for travel time and family. Since I did not start work on August 1, my salary was reduced by five days. I have a debt. I pay 2,200 shillings and send 2,000 shillings to my parents.

My sister is moving here next November so I will start paying rent soon. I have been using the 50/30/20 model to save and have managed to keep Sh62,000 in a money market fund. I have been using a different money market fund as an emergency fund but have now exhausted that account.

I always keep track of my money but I don’t see where I have wasted it. I have a daughter in grade three and paying her school fees is a challenge. How can I invest my savings of Sh60,000? I am looking for short-term returns for at least three months that I can use to grow. We are on a two-week leave and I don’t know how long my current job will last. I may not even be called back.

You need to identify why you are struggling to manage your finances despite having a job and trying to save. You can apply the “5 Whys” technique to dig into the root cause of your financial challenges.

This technique involves asking why the problem occurred and then repeating the question “Why?” four more times until you find the root cause.

From my analysis, it appears that the root cause of your financial challenges is the lack of stable, long-term employment, which may be partly due to gaps in skills or qualifications.

Addressing this root cause may require investing in skills development or education that aligns with stable employment opportunities.

It is commendable that you have identified the challenges you face, which include unstable income, high cost of living, debt, and limited savings.

Your income has been unstable, with periods of unemployment and low-paying jobs.

Your daily expenses for housing, food and transportation are large and take up a large portion of your income. You also have outstanding debts and school fees to pay.

You’ve exhausted your savings, and you’re struggling to build an emergency fund.

Although you have not provided a breakdown of all your expenses, such as the amount of your child’s school fees, I urge you to carefully track all your expenses to identify areas where you can cut back.

Consult a financial advisor to discuss debt management strategies, such as debt consolidation or debt repayment plans. A financial advisor can also provide personalized guidance on budgeting and saving.

Even in tough times, try to build an emergency fund. Be careful about taking on additional debt unless it is for essential needs.

Don’t hesitate to ask for help and advice from friends, family or professionals. Helping your parents is a good idea but you should do it within your means. Talk openly with all your family members so they can understand your precarious financial situation.

Consider additional sources of income to supplement your income. Explore opportunities such as selling goods online or offering services that match your skills.

There are various investment options that you can take advantage of to invest the amount you have now. However, it is important to take into consideration your risk profile and the time frame for your investment. It is good to already have some experience dealing with money market funds.

An MMF ensures you get a return on your investment while protecting your capital. You can also grow your portfolio by making regular contributions, and the funds are readily available if you need to withdraw funds.

By saving Sh60,000 in a mutual fund that returns 14% per annum, after deducting taxes and management fees, you will have at least Sh69,000 in a year. Given your need for short-term returns and security, a mutual fund may be the right investment option for you.

A fixed deposit account is also an option because it can provide a safe and guaranteed return on your savings, although the returns are low.

Treasury bills, bonds, and commercial paper are other investment options you may consider in the short to medium term.

You need a minimum of Sh100,000 and Sh50,000 to invest in Treasury bonds and Treasury bonds respectively. However, for infrastructure bonds, you need a minimum of Sh100,000.

You can invest in 91-day Treasury bonds, which are safer and typically offer higher returns than money market funds, but you’ll need to increase the amount you have to meet the minimum amount.

The average coupon rate on the latest 91-day Treasury note was 15.7502 percent, and the latest infrastructure bond was 14.3990 percent.

If you are a risk taker and don’t mind keeping your money in long-term investments, you may want to consider investing in stocks.

If you are open to entrepreneurship, you can consider a small business that does not require a huge initial cost but can generate profits within three months.

You should consider joining a savings association as they offer savings, loans and investment products. I advise you to always remember to transfer your savings association earnings into deposits to help increase your borrowing capacity and earn high returns in later years.

Charities are a good source of development loans because they can offer you a loan amount equivalent to three times your savings.

However, your income sources must be sufficient to pay the monthly loan installments.

If you have any financial issues, email us at (email protected) and leave your contact number. Financial questions will be answered in this column.