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How Long Will It Take You to Make Ksh1 Million, While Earning Ksh50k a Month?
How Long Will It Take You to Make Ksh1 Million, While Earning Ksh50k a Month?
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How Long Will It Take You to Make Ksh1 Million, While Earning Ksh50k a Month?

Stephen Kimani
September 18, 2023

A million. We all have dreams of becoming millionaires. Therefore, we spend a lot of time thinking about and checking our bank balance and hoping that our account will be seven figures one day.

Sometimes, we overestimate what a million could mean for our lives. But similarly, we underestimate the work we need to put in to have a million shillings.

In this article, we seek to understand further what a million shillings means and how to have it, all on a Ksh50K salary.

Difference Between Making a Million and Having a Million

Before we get to the bone of the matter, let's clear the flesh first. There is a difference between making and having a million shillings.

Making a million shillings is just the cumulation of your money over time. If your salary is Ksh50,000, then that would take you only 20 months to make a million. However, that does not mean you are a millionaire because, after 20 months, you will have spent most of the money.

Many people have made millions, but very few have millions.

Having a million shillings is much more difficult because using the average savings rate for Kenyans - 12.1% - if you are making Ksh50,000, then you are saving Ksh6,050 every month. It will take you 166 months to save a million. That is equivalent to close to 14 years.

Of course, these are rough calculations, not considering taxes, interests and investments, and other life realities. However, this helps you understand that having a million is more demanding than making a million. 

Read Also: Compare Kenya’s Top Savings Accounts and Start Saving Today

How Much is a Million?

If having a million is much more difficult and time-consuming, how much is a million?

If you had a million shillings in one shilling coins and started counting a shilling every second, it would take 12 days to finish, assuming you counted day and night for 24 hours straight without stopping. Similarly, if you spent Ksh1000 daily, it will take you 2.7 years to finish the million.

As you can see, a million is a lot of money. But you still want to be a millionaire. How do you get there?

How Long Will It Take To Save a Million?

You can use many ways and financial models to be a millionaire, but in this article, we shall highlight two approaches and try to paint a picture of what each takes.

The Frugal Plan

The frugal plan is for someone hellbent on crossing the million mark by whatever means necessary. They are committed to making all the sacrifices it takes. They are sometimes sacrificing other essential parts of their lives to the altar of becoming a millionaire.

The frugal millionaire knows every shilling that comes in and goes out. They have a minimalist mindset.

A minimalist mindset is a mindset of living on as least as necessary. 

For instance, a minimalist will not have a closet full of clothes they wear once a year. They will only have clothes they use regularly. They would not have a chandelier, while a bulb can light the same room. They will not eat out if they can buy discounted food and cook at home.

Living like this takes dedication.

In terms of numbers, if you are making Ksh50,000 and living a minimalist life, you could save half of your salary. All factors constant; while saving Ksh25,000, it will take you 40 months to hit the million shillings mark. That is three years and four months. That means if you start now, you will have a million in the bank before the turn of the next electioneering year (2027).

While this is enticing, it may not be plausible for many people. Life is much more than just becoming a millionaire for most people. So how can the normal mwananchi do it?

Read Also: How to Save 1 Million in 24 Months

The Normal Mwananchi Plan

It is difficult to put the normal Mwananchi in one box and do their numbers for them because everyone is unique. Their needs, wants, and motivations are different. But we shall take a typical scenario and work out how to get to a million, and then you can curate this for yourself.

A typical Mwananchi saves between 10% and 30% of their income. The best bet is to go with 20%, the saving percentage many personal finance experts recommend.

Saving 20% requires sacrifice, but not the sacrifice that would cripple other aspects of your life.

Therefore, if you save 20% of Ksh50,000 every month, you are saving Ksh10,000. That will take you 100 months of saving to make a million. 100 months is equivalent to eight years and four months. Therefore, if you start today, you will be a millionaire in 2031. That is just a year past the target date for Vision 2030.

While this might seem like the million mark is too far, remember the expectation is that in 10 years, you will have grown in your career, or your business will have grown. If you maintain the same 20% saving plan, you will save more than Ksh10,000 a month; hence, you can bring your target closer. 

Plus, savings interest will also help you get closer to your target. A good savings account can earn you an interest of as much as 8% per year. Hence, if you save Ksh10,000 every month for a year, your savings will earn you Ksh9600, which is almost a month's worth of savings.

The Mwananchi plan is the most risk-mitigated way of getting to a million. What if you want to take on more risk and speed up your journey to a million? What do you do?

Read Also: Mastering the Art of Saving: Strategies to Boost Your Savings

Should You Save a Million?

While saving a million is a great idea, it is not necessary. You can decide to leverage smaller savings to raise capital to make investments that can fast-track your financial freedom journey.

This is where loans come in. I know you have heard people casually mention that you cannot be wealthy without having debt. There is some truth in that.

Think of a loan like this. As we have seen, saving Ksh10,000 every month will take over eight years to save a million shillings. However, you can ask a bank to give you a million shillings upfront, and you will pay them back in eight years. 

Then, you can use the million shillings to make investments today that, in ten years, will have blossomed into successful businesses, making you much more.

This is a simplified way of looking at it, and you need to consider many more details before taking on this plan. You also have to remember that it is a very high risk, and you might lose a million shillings, especially if you are a first-time investor or entrepreneur and still have to pay back the money.

However, if you want to take this path, start with Money254 and compare money lenders and the conditions, including the interest and repayment period they offer. 

Read Also: How to Get the Most Out of Your Loan

The Pros of Using a Loan Instead of Raising 1 Million as Capital

A loan is one of those animals that depends on how you tame it. If you successfully tame it well, it can make your net worth grow by leaps and bounds, but if you fail to tame it, it can consume even the little you have and leave you hopeless.

On, we have a ton of content that can help you learn how to tame this beast. But as much as it is a beast, it is tameable. And once it is tamed, it is like a strong bull that will plough your land for you and maximize your output.

A loan can give you a headstart in a venture you want to undertake. It can provide the necessary capital to make your dreams come true. It can be the capital injection to elevate your business and double your earnings. It can also be the money you need to start that side hustle to increase your income. In short, a loan is the tool you need to bring your millionaire target as close as possible.

Read Also: 5 Ways a Personal Loan Can Improve Your Life

The Take Away

So, how long does it take to have a million while earning Ksh50,000? It takes as long as it takes. Take a moment, and analyse your financial situation, the sacrifices you can make, the risks you can stomach, and the quality of life you want to live as you pursue your dream. This is your game. You set the rules, so play away.

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Stephen Kimani aka KIMSpeaks is a thought leader, speaker, and writer. He is also the Founder of Living the DREAM. He is passionate about learning and teaching ideas that empower people to improve the quality of their lives. You can connect with Kimani on LinkedIn.

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