Managing your money with confidence

By Catherine Muraguri

Susan is a single 29-year-old information technology specialist. She is paying

mortgage, owns a car and counts herself lucky to have a job that pays her well.

But she is perplexed. By the middle of every month, she is broke and can hardly wait for the end of the month for her salary. Many times she has had to borrow from friends to keep afloat until pay day. She has no idea how she spends her money.

She is not alone; she is among the growing number of upwardly mobile young Kenyans with good jobs that pay well, but whose expenses demand that they learn how to manage their money — otherwise it will go down the drain.

Financial experts recommend that saving at least 30 per cent of one’s income is not a tall order. If you do not have major responsibilities such as paying school fees, or do not have dependants, then try and achieve this goal.

You will be surprised how much money that is set aside every month will have accumulated by the end of the year. If possible, put the money in a savings or fixed deposit account where you cannot access it.

Also strive to have a passive income. Unless you would like to be in employment everyday of your life, look for other alternative sources of income to supplement your income from your day job.

If you like farming, you can think of renting land where you can grow crops, if you love movies, consider having a video shop or if you love cars, start a car wash business.

Few jobs are certain in the current economic uncertainly so a side business would cushion you in case you were declared redundant.

Always remember to watch your entertainment spending. There is always the tendency, especially for weekend activity to take up a lot if not most of your cash.

The cost of alcohol, roast meat and weekend activities can put a huge dent in your pocket. Watch how you spend this money by simply preparing a budget; have a spending plan and stick to it.

Investment group

You can join an investment group, which can encourage you to save and invest your cash in ventures that will put your money to good use and thereby bring in extra income after a certain period. The advantage of a good investment group is that members can brainstorm and come up with creative ideas that can generate extra income.

Ensure you have adequate insurance cover because could things do go wrong without warning.

It would be to your advantage to have insurance such as personal accident insurance, medical and other adequate cover that will be relevant to you.

As a young working person, this is the time when you start accumulating valuable assets such as flat screen TVs, costly house appliances and the like.

Many loans

Ensure that you have adequate contents insurance incase fires and other misfortunes.

Draw up a plan for your finances for the years ahead: Do you plan to build or purchase a house in the future? Do you plan to pursue further studies? Find out how much these will cost and budget accordingly.

There is no time to plan like the present, if you have much disposable income, to put some aside some for the future.

Also, avoid the allure of too many loans thinking that you will be able to service all of them. Make sure you only have loans that you can manage to pay comfortably otherwise most of your salary will be spent in servicing loans.