It doesn’t matter where you are in your financial journey, you
need to have a budget if you are to be financially successful.
If you are earning 30,000 shillings, this video is for you.
However, if you are earning more or less don’t skip. Today, I will be teaching
you on the most efficient method to budget for Ksh 30 thousand and get to live
the best life out of your hard earned money.
One of the tried, tested, approved and recommended budgeting
strategies for a person that is earning as much money as you are is the
50/30/20 strategy.
According to this budgeting technique, you are supposed to
divide the money that you make every month into three primary categories.
The first category will involve your needs. In this category
you will allocate 50% of your income.
The second category is wants. In this category you will
allocate 30% of the money that you are making.
The third and last category is savings. Remember, saving is
very important if you have goals. Therefore, every month never forget to save
20% of the money that you are making.
Read also: The Importance of Having Financial Goals as a Youth in Kenya
I believe up to there you have understood how the 50/30/20
rule works. However, let’s now dive into the actual budgeting as I expound on
this amazing strategy.
Personally, as I was starting off, this strategy helped me a
lot and it still does even in the present moment.
Now, I am a fresh graduate from university or college and I have
managed to secure my first job. As many starters, my salary is Ksh. 30, 000.
The first thing that I will do is divide my money into three
50, 30, and 20 percent respectfully. 50% of 30k is 15,000 shillings. Now, I will
make sure that all my needs are squeezed into this 15k.
So the big question will be, what are my needs?
First things first, needs vary but in this video I will try
to point out the essential and common needs that will apply to nearly every
one.
These needs include things like;
- House rent,
- Food,
- Fare,
- Medical expenses and
- Other utilities such as electricity and water.
The Breakdown of Your Needs
Let’s look at how to budget this Ksh. 15,000 for your needs.
House Rent
Ideally, your rent should not exceed 30% of your total income. For someone earning Ksh. 30,000, this translates to about Ksh. 9,000. Look for affordable housing within this range. If possible, share a house or live in a location where rent is lower to save more.Food
Food is another critical expense. Allocate approximately Ksh. 4,000 to groceries and daily meals. Be mindful of your spending—prioritize cooking at home instead of eating out to stretch your budget further. A well-planned meal schedule can help you save even more.Fare
If you commute to work, allocate about Ksh. 1,500 for fare. Consider cheaper alternatives like public transport or carpooling with colleagues if you can.Medical Expenses and Insurance
Budget around Ksh. 500 for medical needs or NHIF contributions. It’s essential to prioritize health, as unexpected medical bills can disrupt your financial plan.Utilities (Electricity, Water, etc.)
Keep utilities within Ksh. 1,000. Be energy-efficient and avoid unnecessary expenses, like leaving lights on or using energy-intensive devices unnecessarily.
Wants – Allocating 30% (Ksh. 9,000)
Now let’s move to the second category, wants. These are things that make life enjoyable but are not necessarily essential. Examples include:
- Subscriptions like Netflix or Showmax (Ksh. 1,000)
- Entertainment or outings (Ksh. 2,000)
- Personal grooming and shopping (Ksh. 2,000)
- Saving up for a gadget or vacation (Ksh. 4,000 spread over months)
While this category is about enjoying your earnings, exercise moderation. Don’t overspend on wants at the expense of needs or savings.
Savings – Allocating 20% (Ksh. 6,000)
The final and most crucial category is savings. This is where you invest in your future. Let’s break down how to manage this amount:
Emergency Fund (Ksh. 3,000)
Set aside half of your savings for emergencies. Aim to build an emergency fund that can cover three to six months of your living expenses.Investments (Ksh. 2,000)
Use a portion of your savings to invest in assets that grow your wealth. Consider SACCOs, money market funds, or stocks.Personal Development (Ksh. 1,000)
Allocate some money to build skills or pursue certifications that will increase your earning potential. This is an investment in yourself and can lead to better opportunities in the future.
Tips to Make This Budget Work
Track Your Expenses
Use apps like M-Pesa statements, expense trackers, or even a notebook to monitor where your money goes. This will help you stick to your budget.Cut Unnecessary Costs
Identify areas where you can cut back. For instance, reduce takeout meals or downgrade subscriptions to save more money.Automate Your Savings
Set up a standing order to transfer 20% of your salary to a savings or investment account immediately after you’re paid. This ensures you prioritize saving.Review and Adjust Regularly
Life circumstances change—review your budget monthly to ensure it aligns with your goals. If you get a salary increase, adjust your percentages to save and invest more.
Real-Life Example
Let’s consider Wanjiru, a 25-year-old graduate earning Ksh. 30,000. Here’s how she uses the 50/30/20 rule:
- Needs (Ksh. 15,000): Wanjiru pays Ksh. 8,000 for rent, Ksh. 4,000 for food, Ksh. 1,000 for fare, and Ksh. 2,000 for utilities and medical.
- Wants (Ksh. 9,000): She spends Ksh. 2,000 on entertainment, Ksh. 2,000 on shopping, and Ksh. 5,000 is saved toward an annual vacation.
- Savings (Ksh. 6,000): Wanjiru puts Ksh. 3,000 into her emergency fund, Ksh. 2,000 in a SACCO, and Ksh. 1,000 for online courses.
After six months, Wanjiru has an emergency fund of Ksh. 18,000, is planning her first holiday, and has acquired new skills for her career growth.
Conclusion
Budgeting is the foundation of financial success. By following the 50/30/20 rule, you can make the most out of your Ksh. 30,000 income without feeling deprived. Remember, the goal is not to limit yourself but to create a plan that aligns with your priorities and sets you up for a stable financial future.
Take control of your money today, and in no time, you’ll see your financial goals turning into reality.
What budgeting strategy do you use? Share in the comments below!
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