Living in Nairobi can be an expensive affair even for the most financially disciplined individuals. Prices of basic necessities have skyrocketed over the last few years.
If you walk into your favorite supermarket and pick out 2kg of rice, 2kg of sugar, and 2 litres of cooking oil, your Ksh1,000 note will only leave a puzzled look on the cashier’s face as this is not nearly enough to cover the cost. Three items and your treasured Ksh1,000 note is gone.
As much as we can push the national government with noble hashtags to lower food prices etc, it is also prudent to look inwards and find ways to make savings and boost our chances of survival in the concrete jungle of Nairobi.
Many of the most important money habits, such as saving, investing, and cutting back on spending, are developed over time. These are not short-term objectives, but rather long-term solutions. Still, there are many things that can be accomplished in a year or less that could make a significant difference.
This article will look into 5 practical things you can do to improve your personal finance or financial health if you like.
‘Beware of little expenses; a small leak will sink a great ship’.
One can simply start by tracking all monthly expenses and noting them down on paper or an excel sheet.
This financial task may appear simple, but it is critical for determining where your money is going and how you might be able to better allocate it.
As you keep track of your expenses, categorize them in a way that makes sense to you (bills, food, transportation, eating out, entertainment, etc)
Calculate the total you've spent in each of your categories at the end of the month. It will then become clear where you can cut back on spending, if necessary, and where you should spend more money.
Do those weekend escapades with the boys or girls leave you high and dry come Monday morning? What would happen if they happened once or twice a month instead of every other weekend?
Such questions can then be tied to actual money and major savings made.
Now that we have a clear and detailed picture of where our money goes each month, the next logical step would be to go even deeper and do price comparisons.
The good thing about living in Nairobi when it comes to purchases is the variety in terms of retailer options.
In this age of technology, doing price comparisons is as easy as scrolling through the Google app on your phone. It goes without saying that the major retailers e.g. supermarkets have significant price variances.
Checking up on such could not only lead to significant savings when it comes to monthly shopping but crazy online offers as well.
At a time when millions of Kenyans are crying out for a reduction in food prices, it makes sense to do some research prior to making purchases.
This applies to the ‘sherehe budget’ as well. Eateries and lounges across the Kenyan capital have extreme price variances depending on location and perception. If you can save Ksh1,000+ on a simple night out by switching spots, do it.
Speaking of purchases, bulk is the way to go and you should not be led to believe otherwise a bulk will always be the cheaper option.
Let's say you spend Ksh20 on 2 tomatoes each day, which translates to Ksh600 (in a 30-day month). Now, the price of a kilo of tomatoes in Nairobi is Ksh103. This average is based on 7 price points. It can be considered reliable and accurate.
This could go as low as Ksh95 in some open-air markets in and around the city. This means you could probably get 6 Kgs of tomatoes for the same 600 bob or just 4 Kgs for Ksh400 to cover the entire month, thereby saving Ksh200. This may not seem like a significant figure, but let's not forget that this is just a single item, tomatoes.
In case storage is an issue, as is the case with perishables, buy semi-ripe tomatoes and buy them in intervals, eg. 2kgs to cover the first 2 weeks and 2 more for the last weeks of the month.
Also, make a habit of buying household goods, especially vegetables and foodstuff, whenever you get a chance to travel out of the city. Good rice is always available at ridiculous prices around Sagana and Embu, onions in Emali, potatoes in Molo, etc. You can always find a decent bargain during those trips.
These little savings here and there mount up to a significant number at the end of the month.
Unknown to most, banks now do so much more than just take deposits or dish out cash. We are living in the era of personalized banking where the various players in the Kenyan banking sector are jostling for ‘the best bank’ position.
One can use this to their advantage by using their bank as a personal finance advisor. Having a finance manager could be out of reach for most, but it would be a fair assessment to state that most of us have bank accounts.
Current banking halls all have a customer service desk or a personal banker desk ready to serve its customers ie. you and me. The adage Kenyan saying ‘kuuliza ni bure’ - loosely translated to asking is free applies here. These banks are filled with finance gurus who can offer sound advice for free.
It is important to note that your bank advisor is not a free financial advisor. In general, there is a minimum amount that it expects you to continue to invest there in order to maintain the services. Because you already have a relationship with your bank, you may want to work with them.
A good financial advisor will listen to your goals and understand the amount of risk you are willing to take so that they can recommend products that will help you achieve those goals.
They should be able to assist you in developing a financial plan. Furthermore, they should be able to explain the risks and benefits of each investment option, as well as show you how to spread your investments across multiple options and risk categories to protect yourself. If they are unable to do so, you should seek a new financial advisor.
You can’t use the money you don’t have or can’t access which is why direct deposits straight into your savings account can save you from spending temptations.
You can set up a direct deposit and schedule automatic transfers from checking to savings once your account is open.
Rather than receiving and depositing a check every pay period (or other checks such as side hustle payment), direct deposit automatically transfers your payment to your specified bank account.
This is a sure-proof way of nurturing your financial discipline as it takes out the option to splurge out of the equation. Savings accounts usually have transaction limits and typically have higher interest rates than checking accounts, which is why people tend to use them when it comes to stashing money away and watching it grow.
The majority of people begin withdrawing money from their checking accounts as soon as they deposit it. They need this money for groceries, rent, mortgage payments, car loan payments, and entertainment. If there is any money left over, it is transferred to savings.
Unfortunately, there is never enough money left over. If there is, they fail to transfer it to a savings account and instead leave it in their checking account, where it is eventually spent.
As a result, automating your savings may be the key to ensuring that you save enough money for a rainy day fund.
Too many people spend money they earned..to buy things they don’t want..to impress people that they don’t like. Your financial discipline is tied to your success, which is why nurturing it should be an everyday thing.