#06 Budgeting

My apologies for missing out on last week’s post. The article was actually 95% done but I still wanted to sit with each of the respondents (in my head) and listen to them once more. And my conclusion is this, that there are several ways to skin a cat. Today’s article introduces BUDGETING; the second chapter of the Personal Finance and The Pandemic writing series. Like the preamble, Foreign Ground, and the first chapter, Accounting, this section begins with testimonials from the pandemic. I’m sure you’ll find today’s article thought-provoking.

I budget in my head. I know my disposal income and will knock off my fixed expenses first; rent, chama, SACCO. Whatever’s left is for my matumizi. I’m still intent on completing my mjengo and the day I return to that project, I’ll task someone to do the math, get quotations thereafter and then wire cash per targeted phase of construction. I guess a proper project is what will push me to using an excel worksheet. _{Musili, 30s, Compliance Expert}

The pandemic did not affect my finances adversely and therefore I did not have any motivation to budget. The truth, however, is that I’ve always struggled with budgeting and especially in keeping up with my expenses. There was this one time when I religiously detailed all my expenditure on a piece of paper that was pasted on my bedroom wall. Four months later I quit. Maybe it’s because I didn’t see the purpose of it all. I generally live within my means and never do extremes. Still, there’s a lot of room to track where my money goes. I’m financially literate and know what I should do, the problem is getting to do it. _{Salama, 40s, SME Practitioner}

I do not have enough to save right now but I budget as the money comes. I don’t want to slack on my bills. My brother is in secondary school and his fees needs to be paid too. _{Olamaiyan, 20s, Legal Intern}

I don’t budget. My cashflows are so unsteady that it doesn’t make sense to budget. I mean I could budget for food then the gas runs out. I do want to plan but things keep on coming up. The rising prices have also made budgeting impossible. _{Wamaitha, 40s, Farmer}

I’ve always budgeted but this long and on-going pandemic has skewed my numbers. The indirect costs of the pandemic like preferring to use an uber as opposed to a matatu or bus has automatically increased my travel expenditure. And though I’ve not had to pay school fees for a year, I’ve had to get a private tutor. My house help used to report work every day but with the COVID situation, I preferred that she lived with us and that came with a cost too. Online shopping became a thing and my basic needs got mixed up with unnecessary stuff. I gradually begun to budget different, looking out for every opportunity to cut costs including doing things myself (DIYs). Survival requires that we adjust to a hard system. _{Blessing, 40s, Doctor}

I am budgeting with a little more intensity. My previous budget mainly focused on family items with a few specifics like living expenses and fuel. I had so much flexibility. I more strict now and even have a budget line item on entertainment. It doesn’t always work but I try to make sure that I achieve 70% of my monthly budgeting targets. _{Amani, 40s, IT Guru}

I am more conscious about my expenditure. Should I uber or take the bus? Mostly, I think of the kids. Can the extra savings go towards something for them? _{Joe, 40s, Architect by day, Business Analyst by night}

COVID definitely changed my budget but it did not change how I budget. Although my income is irregular, I always invest first. I then settle my recurrent expenditures and whatever is left thereafter niyakujivinjari. Before I paid my dowry in Mar’20, I prepaid my rent for a year to Mar’21. Family and friends, however, unexpectedly gave towards my ‘marriage bill’ and that cash went straight into my FOSA account. I withdraw cash from the account every 2 months and use this to meet my monthly bills. Apart from the dowry period, I normally pay my rent quarterly in advance. Sometimes I don’t have to reach for the FOSA savings because of interim or final dividend payments from the NSE. I always reinvest a certain percentage of my income so that I keep my portfolio growing. Once I make 30% in profits, I offload a portion of my shares. Capital gains are very good but sometimes the stock market can get very depressed. I make plus/minus 750k from the bourse annually. Sometimes it’s an element of luck but most times it’s about planning. One day I’ll walk you through my financial charts so that you can understand my trading logic. _{Sunday, 40s, Investment Analyst}

My income is now driving my budget. I’ve completely stopped the impulse buying and have made deliberate efforts to reduce my expenditure. For instance, I’ve changed my lunch joint and now spend 150/- as opposed to 250/- For most evenings, I just have some tea and bread. _{Zaire, 30s, Economist}

Nimekuwa nikibudget both before and after COVID. I use the Japanese Kakeibo method of budget and try to follow it as much as possible. Hii COVID nimejaribu ku-save every single coin I can; target ni 35% per the Kakeibo method. _{Kevo, 20, Aspiring Mechanical Engineer}

The pandemic has moved me to spending less and investing more. That’s how I work out my budgeting in short. _{Seydou, 30s, Finance Student majoring in Digital IT & Entrepreneurship}

This season has required us to budget more tightly as one of our salaries went down. We’ve also had it mind to support our family, friends, and colleagues who are going through a rough stretch. _{Muriithi, 40s, Wealth Advisor}

My life is pretty mundane. Mortgages, food, utilities; that’s what my budget looks like. Mortgages are my biggest expense and I try to keep the payments at the very minimum; below market rent levels so that I can comfortably continue with the payments even if my job came to an end. When my husband fell sick, we cut out meat from our groceries list. Our food bill reduced significantly as meat is extremely expensive here. And then there’s utilities. I try to make sure these 3 categories are under one third of my monthly take home. The other two thirds goes to my emergency accounts. I keep 2 accounts and like to maintain a certain cash threshold in each. One is a checking account, the other a credit & savings account. The latter is what I use to secure loans and therefore important that I sustain my preferred credit score. _{Victoria, 40s, Governance Risk and Compliance Expert}

We’ve cut down on unnecessary expenses. For instance, I’d take my family for a treat almost every Friday and Sunday and spend an upwards of 5,000/- for meals; more than 40,000/- each month. We also postponed a decision to move into a bigger house. We figured that if we wait a little more, we would get a good deal on both the property and monthly rent. _{Kigen, 30s, Data Specialist}

The pandemic has not affected my budget; it has remained the same. _{Sophia, 40s, Due Diligence Analyst}

I started saving while in elementary school but that was just to buy what I wanted. The real journey to frugality, however, started in university and by the time I got to my first job, I understood that saving was not just about getting what I wanted but meeting my needs. That’s where we get it wrong, confusing needs and wants. A lot of people buy things they do not need. Wants are not needs! Every year, I anticipate my needs for the following year and save up accordingly. I track every single coin including MPESA withdrawal charges. I’m also very mindful of what I buy. I never walk into a supermarket aimlessly. I only get what I need and more often than not will shop at a wholesale. They are cheaper! Yes, I do treat myself during my birthday and once in a while buy nice things but I budget for it. Budgeting continues to help me understand where my money goes and keep my costs low. _{Jasmine, 30s, Policy and Advocacy Specialist}

I keep a very simple budget. It’s not written but I just know once I pay my rent, the rest is easy. My electricity and water consumption is well managed. My household supplies cost about 10,000 bob and that takes me longer than a month or two to consume. The only other ‘BIG’ budget items are food and transport. I don’t worry about savings because the people at accounts office transfer it directly to the SACCO before they can pay me. Any extras will go to entertainment or buying a little something for my nephew or taking a cab to work on the days I’m not feeling too well. _{Regina, 30s, Graphics Designer}

Apart from increasing my retirement contribution, my budget hasn’t changed. Retirement? The IRS restricts how much an individual can put into their 401(k); a maximum of USD 20,500 per year. When you hit 50, IRS permits you to increase your contributions by USD 6,500 annually. _{Austin, 50 this year, Vice President – Internal Audit}

Masks, sanitizers, PCR tests, supplements. My budget has definitely taken a dent in meeting all these COVID precautionary measures. I’m also trying to find ways of keeping my expenditures low. If I can get a substitute for certain products, why would I go for a more expensive option? _{Emmanuela, 40s, Development Specialist}

I’m pretty decent when it comes to budgeting. The practice of it has not only made me good with money but has increased my knowledge on potential avenues of income including passive cash. I’m constantly trying out new things and though the money is yet to flow in, I’m confident that I will be able to manage money 10 times better than I previously did. The pandemic has made me (more) shrewd. Things that I previously considered necessities are now luxuries. I diet quite a bit and that has helped me cut a great deal of junk off. I have a basic set of clothes and have literally streamlined the way I live. I feel liberated and have been questioning the meaning of life. Do I really need everything I have or is food, shelter and having purpose enough? I have adjusted to having a meal a day and think through fixing a problem before I can spend money on it. _{Nyamari, 30s, Techpreneur}

The pandemic did not really change the way I budget. What I’m trying to avoid is the penalties that come with late payments. Sometimes work gets pretty heavy and I forget to check my bills. When COVID hit, I had to wait until I was generating income to get back on course with regular payments. Apart from that, I’m quite frugal and my expenses have remained fairly the same. I don’t go on holidays but probably need to think about it seriously and take my kids to see the world. Slowing down. I need to slow down. _{Israel, 50s, Finance & Commercial Executive}

As I have budgeted or rather planned out my finances, my focus has been on savings. And particularly leveraging my investments in such a way that they can continue to yield a return even in times of crisis. You know money that is not tied to some payroll. I’m reconsidering my investments and asking questions like how can this piece of land give me a monthly income? I’m looking for capital gains and searching for cash flows because cash really is king. _{Roxie, 40s, Finance Expert}

I save over 20% of my earnings. Partly because of COVID which has fueled the need to put something aside for stormy days and partly because of the unexpected surplus that has come with this season. There’s also flexibility in my budget to meet the needs around me. As you can attest, there’s been no one time during these past few months that we did not know someone who has been affected or succumbed to COVID. I’ve also left room for generosity with self and will buy something I like if I can afford it. _{Sankara, 40s, Accountant}

I hope today’s stories have helped either deconstruct budgeting in your mind. Or reinforced the way you budget. And helped you see that budgeting actually works. Next week we get into the basics of budgeting; more like a theo-practical session which may end in homework. Do have a wonderful weekend 🌻 🌻 🌻