I work as an online tutor and do data entry for a home health nurse. I have no debt. My monthly earnings fluctuate, with my best month coming in at $6,200 (Sh800,000) and my lowest at $2,500 (Sh320,000) in 2024. I’ve earned $6,000 (Sh770,000) in my best month so far this year.
My expenses include rent (Sh14,000), food (Sh10,000), black tax (Sh15,000), internet (Sh4,200 since I work from home), website hosting Sh3,225 per month and marketing (Sh5,000). I also own a quarter plot of land worth Sh3 million and a car valued at Sh900,000.
I am currently torn between pursuing a master’s abroad, which costs Sh3.95 million or expanding my business. Studying abroad would affect my business since I manage client tasks full-time. I also want to expanding mum’s chicken business. My long-term goals include building a house (Sh9 million), building passive income, and starting a family before I turn 33. With bank savings of around Sh4 million, I am unsure whether to prioritise education abroad or business expansion.
Dominic Karanja, a financial planning and investments consultant
You are financially strong with no debt, growing income, and solid savings.. You currently hold assets and savings valued at approximately Sh8.3 million, with about Sh4 million readily accessible, and that’s a strong financial position, especially for someone your age.
Studying for a master’s degree abroad has an opportunity cost of lost income and delayed progress on your other goals.
Spending most of your savings on tuition reduces your buffer for unexpected expenses or business investments. You aim to start a family before 33, and studying abroad would take up significant time. Your income is growing through referrals, showing potential for further expansion. Supporting your mother's business aligns with your values and could provide extra income. Here's a structured approach to help you.
Short-term Goals (0–12 Months)
a) Track income and expenses
Your total expenses come to an average of Sh51,425 per month. However, with your lowest monthly earnings in the year 2024 coming in at Sh320,000 there is the question of how well you track your expenditure and your earnings. There are huge disparities between your monthly earnings and expenditure that you have not accounted for.
By tracking the actual amount of money coming in and the amount going out, you will be better placed to understand whether your earnings are monthly, quarterly or biannual.
b) Boost your emergency savings by saving six months worth of living expenses in a high-yield account (Sh48,000 x 6 = Sh288,000). Your expenses also exclude allocations for savings and investments, despite the large amounts that have not been accounted for.
You need proper bookkeeping to establish what amounts you are saving per month and in what types of investment vehicles. For example, how long have you been working to save the Sh4 million in cash and acquire your current assets?
c) Define goals for your tutoring and data entry business, target clients, and strategise marketing. Your business is growing, but you must be strategic in your expansion to avoid disbursing too much capital without corresponding returns. Redesign your website to attract clients and create passive income. Explore new marketing channels beyond word-of-mouth.
d) Set specific savings targets for your house, business investments, and future education. You can build your house in phases. Start by getting your desired building design plan and bill of quantities, map out the construction area and start setting up the core construction materials such as sand and ballast.
Set up the foundation and slab, take a break, set up walling and the lintel, take a breather, set up the first-floor slab, and so on. This will enable you to space out your funds well.
e) Invest in your mother's chicken business for sustainable growth. This will reduce dependence and help your mother to be economically self-sufficient.
Medium-term goals (1-3 years)
First, assess business expansion and passive income streams after one year. Second, check if a master’s degree is still crucial for career aspirations. If you still desire further education, consider flexible education options like online programmes or certifications. If you decide to pursue the master's, fund it without depleting all savings, possibly through business income.
Explore the possibility of developing your quarter-acre plot by constructing affordable rental units to create a steady stream of passive income. Grow your tutoring business by bringing on a junior tutor to manage excess client workload.
Long-term goals
To achieve your dream of building a home, consider setting aside Sh200,000 each month in a high-interest savings account for three to four years. Alternatively, you could finance the construction using rental income generated from the developed plot.
Ensure a stable and growing income to start a family before turning 33. Understand that getting married comes with additional financial responsibilities that will inevitably slow you down in attaining some of your longer-term targets. This is a goal you can push to between the ages of 35 and 40.
Create a well-balanced investment portfolio by spreading your funds across various asset classes, and turn your tutoring model into a franchise or offer online courses to create a scalable income source.
Investing in your existing business and supporting your mother’s venture will strengthen your financial foundation and help achieve long-term goals. Re-assess the master's degree in a year or two when your finances and business growth are more robust.
Be clear on why you consider studying abroad when you can access the same locally. Is it because of quality or because of immigration? Strategic decisions and growth will help you realise all your aspirations.
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