I am a public service vehicle driver living in Eldoret. I earn 1500 shillings daily, which is 39000 shillings monthly. I get paid daily. I have a wife and three children.
Two of my children are in government primary school (grade 5 and 3) while the last born is starting kindergarten this year. My wife has a stall at the matatu theatre.
I am not sure how much she earns daily but I am glad that the work keeps her busy. My monthly budget is as follows: Rent 12,000 shillings, Food and groceries 15,000 shillings, Electricity and water 1,500 shillings, State TV 2,000 shillings, Mother 2,000 shillings, Wife 4,000 shillings.
Despite working hard, I was unable to achieve any of my dreams which included buying land, building a permanent home for my family and owning a matatu.
I would also like to add financial services like M-Pesa and a mobile banking agency at my wife’s kiosk, but I don’t know how I can raise capital from my salary.
I also thought about buying an apartment on installments for my apartment, but I can’t afford the security deposit. I am in my 40s, and I am afraid that my dreams will fade away. Please advise.
Alex Kibibi is the founder of Rubyani Wealth Management Limited, an investment advisor and business development coach.
To achieve your financial goals, you need to adjust your monthly budget and reduce your spending. Start by reducing your food and grocery budget by 2,000 shillings until you reach 13,000 shillings.
Consider cost-cutting options such as shopping on market days, buying in bulk or in bulk, and cutting back on some luxuries.
Next, take a look at your family allowance. You could reduce your wife’s allowance to Sh2,000 and your mother’s to Sh1,000. Talk openly with them about your financial goals and the need to start saving.
By making these adjustments, your total monthly expenses will drop to Sh31,500, saving you Sh7,500, which is equivalent to Sh290 per day.
I would advise you to prioritize the goal of owning a matatu, as it can significantly increase your income, making it easier for you to achieve your other goals. It is also an investment in a service that you are already familiar with.
Use your experience and networks to research and identify the ideal public vehicle to purchase. For planning purposes, let’s say you decide to buy a well-maintained, used 14-seater vehicle for Sh1 million.
Most financial institutions that offer loans for public transport vehicles require a 20% deposit. To get a 1 million matatu, you will need to save 200,000 shillings. Saving in a charity is a good strategy as it gives you credibility to get the financing.
Find a company that offers PSV financing or one where you can find guarantors to support your loan application.
If you discipline yourself to save Sh290 daily into your savings account and reinvest the profits you make, you should reach your Sh200,000 target in about two years.
You may want to save some money for a longer period to cover licensing and other startup costs, and raise funds to support your wife’s business. Once you have saved enough money, you can get a loan to buy a matatu and set up an M-Pesa and mobile banking agency at your wife’s kiosk.
Assuming your savings association offers a loan at 15 percent interest with a repayment period of 36 months, your monthly instalment will be Sh34,700, or Sh1,350 per day. If your average daily matatu income is Sh4,500, your net daily income will be about Sh3,150.
I suggest you save 1000 shillings daily for car maintenance and emergencies. Set aside 1500 shillings daily (equivalent to 42900 shillings monthly) for your household expenses and invest the remaining 650 shillings in achieving your other financial goals.
You can invest Sh1,000 as an emergency/business reserve fund and Sh650 as “goal” savings in a Money Market Fund (MMF) account.
An MMF account is a convenient way to save money on a daily basis while earning compound interest on your savings. You can search through various MMF providers and find the perfect one to save with.
If you stick to this plan, you will be able to accumulate about Sh220,000 in your “goals” fund within one year and about Sh750,000 by the end of three years.
You can use this savings to buy a plot of land to build your house on. By this time, the matatu loan should be fully repaid and you can get another loan from the sakko association.
At this point, you should consider taking out a development loan to finance the construction of your home. Following this plan, you should achieve, or come close to, your goals by the age of 45.
If you have financial issues, email us at (email protected) and leave your phone number to contact you. Financial questions will be answered in this column.
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