Survival tactics for harsh economic times

By Mwangi Muiruri

Norbert Ng’ethe, a businessman in Thika, bought a car in March last year and praised it among his friends.

"It was a car of my dreams. Though secondhand, I bought it for Sh3.2 million," he says. But when fuel prices started skyrocketing, Ng’ethe says he experienced difficulties maintaining it on the road.

"With the cost of living also skyrocketing, my hardware business also recorded reduced sales, I had to re-look at my budget," he says.

It is then that he sold off the fuel guzzler for Sh2.9 million, bought a low consuming pick-up for Sh450,000 and injected the balance into his business.

Luxury Car

"It was a survival tactic that worked well for me. Whereas I could only use the fuel guzzler for personal errands, the pickup has served the purpose as well as catering for my business’ transport needs," he says.

In that light, he says: "Trade-in your luxury car or sport utility vehicle for something cheaper to maintain."

In hard times, keeping fuel guzzlers off the road is a pocket ‘friendly’ decision.

With a third of Kenyans facing starvation, the general feeling is that times are bad economically. Families are being forced to re-look at their budgets in order to shelve "unnecessary expenses".

Many families are pulling their children out of high cost schools to affordable ones, others laying off house helps with many others moving houses in search of cheaper neighbourhoods.

Mr Steve Oloo, a financial consultant with Everest Credit says: "It is time for economic reckoning. Shoe string budgets have never been important."

Budget Cuts

He says money management always comes in handy at times like these. "It’s about keeping an eye on our budget and making sure every single coin goes to buy only essentials."

He says the philosophy is not how much financial resources we have at our disposal, rather, how efficiently we use what’s available.

It is in this light that Mr Njoroge Ikumbi says he has reduced smoking 15 cigarettes a day to eight. But his ultimate aim is to quit.

Oloo says the worst that can happen to your finances in lean times is to incur unmanageable debts. "Learning how to manage your finances and avoid debts," he cautions.

Ms Stella Mutuku, a household financial expert working as a researcher at the World Health International says: "Budget planning can help you identify how you spend your money and where you may be overspending."

She says her work is to counsel single women on how to prepare budgets.

"List all sources of income. Then list all your monthly expenses, including your house mortgage or rent, food, gas, utilities and debt payments. Then subtract your monthly expenses from your total monthly income," she says.

She says the next step is to go through the budget where you can cut back and save some money.

"But above all, make sure you include between five percent to 10 per cent savings," she says.

With a keen look at inflation trends, she says the budget can always be reviewed "factoring in a drop or a rise on inflation".

Oloo says you should ask yourself where you can spend less without drastically changing your lifestyle.

"Don’t say you are going to give up something to save money unless you feel confident you can do it. Otherwise you are just setting preparing a budget for failure," he cautions.

Credit Card

But as a rule, he says: "Don’t buy anything on impulse. Pay off credit card debt each month, take your lunch and snacks to work, avoid vending machines, buy in bulk and use coupons."

Mr David Mwangi says he has been forced to take up chores that he usually pays someone to perform.

"I’m the one who is mowing the lawn. I longer take my car to the carwash and I hardly make social calls," he says.