Budget of a 36-year-old married father

Budget of a 36-year-old married father
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This is the final of a three-part series that explores the personal budgets of three different Kenyans. I will point out the admirable things about the budget and share tips on how the individuals can make smarter money moves.

To even out the playing ground, I have used the same budget lines for each of the documents under scrutiny.

Today we look at the expenditure of a chap we will call Jack.

Profile of Jack
Age: 36, male  
Relationship status: Married for eight years
Employment status: Salaried on permanent basis with medical cover, allowances and retirement benefit
Obligations: Two kids under six, in school. Retired parents are living in Nairobi. He is the first-born, his three siblings have stable incomes

Jack’s monthly budget
- Salary: Sh200,000 
- Business income:  - 
- Investment income: Sh30,000 
TOTAL INCOME: Sh230,000 
Rent: Sh60,000
Loan repayment: Sh40,000
Emergency fund: Sh15,000
Cash savings (Bank):  - 
Cash savings (MMF): Sh30,000
Sacco savings: Sh10,000
Chama savings:      - 
Retirement policies:  - 
Education policies: Sh12,000
Other investments: Sh10,000
Parents/siblings: Sh10,000
Grocery shopping: Sh13,000
Mama mboga shopping:  - 
Utility bills (Water, electricity): Sh9,000
Internet: Sh5,000
Fuel: Sh5,000
Personal development:  - 
Personal shopping and grooming: Sh8,000
Personal entertainment: Sh12,000
Family entertainment & holidays: Sh12,000

CASH FLOW: Sh(21,000)

How Jack budgets and spends his money
Jack earns Sh200,000 from his salary and Sh30,000 from his investments. His salary plateaued a couple of years back.

He invested in three bedsitters in 2018. He is currently servicing the Sacco loan he took to finance the buildings’ construction. The rental income he makes from these bedsitters – Sh30,000 – goes into his money market fund account (MMF).

Jack says, “As the firstborn in my family, I am often called upon to handle things that I usually have not budgeted for. You know how it goes with family? The money in my MMF account is for handling this. I don’t believe in saving with the bank because the interest earned on savings is so little.”

School fees for his kids also comes from the MMF savings.

Regarding the emergency fund he says, “That is a critical expense. When I turned 30, I made a goal to save Sh1 million in that account. We didn’t have kids by then so it was possible. I now have a years’ worth of money saved. Every man needs his family’s future secured.”

Jack works as a marketer for a home goods company. He gets monthly fuel and shopping vouchers, which supplement those budget lines.

What Jack is doing right
Jack has his savings and investments in order. This comes from years of shooting in the dark and finally finding what works for him, then making subtle improvements as the years go by.

Jack adds, “I learned long ago to set money aside for my Tuskers, ha-ha. I work very hard at my job and I want to be able to enjoy my money with my friends and with my family. I take mama and the kids on holiday at least once a year.”

Jack has also automated his savings and investments – money automatically leaves his current account into his investment accounts at certain dates every month.

Smart money moves Jack should consider
Jack’s budget is overambitious. He has a negative cash flow of Sh21,000, meaning he spends more money than he makes. He should consider revising the expenditure of his budget so that the cash flow moves into the positive, or get another stream of income to cover the deficit.

Another area Jack should look at is his savings for his kids’ education policies. He should compare the cash benefits he will get when the policies mature against the fees of the schools he intends to take his kids. Is whatever he is saving now sufficient?

Hopefully the policies’ returns will be sufficient and Jack will not have to compromise his goals in, say, 10 years, when his kids are joining high school.

Jack does not have any joint investment projects with his wife. As I mentioned in my last story, a marriage presents an opportunity for compounded financial growth.

Another aspect of his finances that Jack should cover is his will and declaration of personal wealth. His wife should know the assets – and liabilities – that are in the family’s name. You don’t want to pass on (God forbid) and leave your family languishing when there are financial assets that they can claim to secure their future.

Do you have questions for the writer? Email to [email protected]