"I Earn KSh 96k But Still Stuck In Cycle Of Borrowing, What Should I Do?": Expert Advises

• A Kenyan man who earns KSh 96,000 monthly sought advice on how to manage his expenses as he was stuck in a cycle of borrowing
• The man broke down his expenses showing he paid monthly rent of KSh 17,000 and a similar amount in loan settlement
• Financial advisor Dorice Anindo advised him to cut on some expenses such as Wi-Fi and Netflix subscriptions and develop a savings culture

A Kenyan man wrote:

"Hello TUKO, kindly assist me if possible. My net pay is KSh 96,000, which I think is decent, but I am struggling financially. Here's how I spend it: Rent: KSh 17,000, loan repayment KSh 17,000 HELB KSh 4,500, welfare KSh 1,000, pension KSh 6,000, Wi-Fi and Netflix subscription KSh 5,000, baby mama KSh 16,000, support for parents KSh 8,000, electricity KSh 2,500. I don't buy airtime because I am on the employer's post-pay. This leaves me with about KSh 19,000, which I don't budget well; I end up spending on food and shopping. As a result, I often resort to borrowing salary advances, Tala loans, etc. For instance, this month, I've already taken a KSh 35,000 salary advance and spent nearly all of it. This means my next paycheck will only be KSh 61,000, leaving me in the same cycle of borrowing again. How can I break free from this trap? Please help."

Doris Anindo is a financial advisor and Certified Public Accountant (CPA).

How you should budget

Doris Anindo, a financial advisor and Certified Public Accountant (CPA), advised the man to manage his expenses by reducing some of them to create room for savings.

1. Wi-Fi and Netflix subscription

For Wi-Fi and Netflix subscriptions, she recommended switching to cheaper options.

"I would advise you to change the subscription fee to a cheaper option, such as Poa Net and Mawingu, which charge a subscription fee ranging from KSh 1500 to KSh 3000, depending on Mbps."

2. Loan repayment

According to Anindo, the middle-income earner should consider renegotiating the amount to be deducted from the loan to be around KSh 15,000 from KSh 17,000.

"It will increase the time frame for the loan repayment, but you will be able to save some amount."

3. Family support

She asked him to honestly discuss with his parents how to adjust the monthly support figure to around KSh 5,000 until he's more financially comfortable supporting them.

4. Baby mama payments

The financial advisor requested the man in dilemma explain to his baby mama his financial challenges.

"Try and renegotiate the amount to be sending her for the support in the mean time until you are financially stable."

5. Balance KSh 19,000:

Budget well using this remaining amount by:

• Develop a savings culture: You can start with MMFs, which are low-risk investment plans which accrue interest. For example, CIC and Sanlam have reasonable interest rates.
• Have an emergency fund: This is money set aside in a bank account to cater for unexpected occurrences.
• Avoid being a people’s pleaser on matters of finances.
• Avoid debts as much as possible. Delete all borrowing apps and discipline yourself to live within your means.
• Do your shopping in bulk. Buy large amounts of essential items like cooking oil, sugar, maize flour, rice, baking flour, soap, tissues, milk, toothpaste, etc. Budget every month. This is cheaper in the long run.
• Avoid impulse buying. Discipline yourself to buy items based on need and necessity.
• Have a monthly budget for your entertainment and recreation. Discipline yourself and know that once this money is exhausted, that’s it.

Disclaimer: The advice in this article is general and not intended to influence readers' decisions about solving financial challenges. Before making a financial decision, readers should always seek professional advice that considers their circumstances.

Do you have a story to tell? Want an expert's advice? Please email us at askanexpert@tuko.co.ke with 'Ask an expert' in the subject line.

Man who earns KSh 30k seeks advice

In related news, a Kenyan man who earns KSh 30,000 sought advice on how to manage his expenses as he was left broke each month.

The man broke down his monthly expenses, including allocations to rent, his girlfriend and house shopping.

Personal finance expert Eric Muchoki advised him to reduce non-essential expenditures to ensure he saves at least 20% of his salary.

Proofreading by Asher Omondi, current affairs journalist and copy editor at TUKO.co.ke.