My name is Kyle. I am a 24-year-old university student. I am in my final year at Mount Kenya University where I have been taking a course in Information Technology. I am also a sports fan and have been placing bets on various sports betting platforms. As luck would have it, I recently struck gold and won a Sh480,000 bet. I am very excited but at the same time, I am very confused on what to do with the money. I have not touched a single cent and no one knows that I have such money in my possession. I don't want to waste this fortune but I also don't know what to do with it. To be honest, I have never touched such a large amount of money in my life. I have thought of opening a business but I am afraid because I don’t have any business experience. What should I do? How do I spend it? What do I invest it in? Please help me.
Dominic Karanja, a financial planning and investments consultant, responds:
It’s natural to feel uncertain about managing such a sum, especially as a student with limited financial experience. You’re now among the few Kenyans with substantial savings—according to Central Bank of Kenya data, only 2.8 percent of active bank accounts held over Sh100,000 as of December 2022. This is a fantastic opportunity, and it’s commendable that you’re thinking about investing wisely rather than spending impulsively.
As a final-year IT student, this money could be a stepping stone towards financial security, professional growth, or even starting a business. While it’s tempting to splurge on something you’ve always wanted, hold off for now. Instead, create a budget and allocate the money based on your goals.
1. Emergency fund
Set aside 20-30 percent (Sh96,000–Sh144,000) as an emergency fund. This will act as a financial safety net for unexpected expenses. Keep it in a money market fund or high-yield savings account for easy access and growth.
2. Debt repayments
Clear any existing debts, including mobile loans. With a significant amount in your account, you might notice your bank’s digital lending apps offering higher limits. Resist the temptation to take on unnecessary credit.
3. Invest in education
Allocate 10-20 percent (Sh48,000–Sh96,000) to further your education or skills. Consider certifications, workshops, or courses that enhance your employability in IT. This investment in yourself will pay dividends in your career.
4. Invest for growth
Use 30-40 percent (Sh144,000–Sh192,000) to invest in growth opportunities. For example:
Purchase a high-spec laptop and start freelancing in IT-related fields.
Explore low-risk investments like government securities or mutual funds.
If you’re interested in the stock market, conduct thorough research or consult a financial advisor.
Consider joining a reputable SACCO to earn higher dividends and access future financing for larger projects.
If you have a hobby or passion that could become a business, start small and seek guidance from mentors or online resources.
5. Personal use
Allocate 10-20 percent (Sh48,000–Sh96,000) for personal use, but avoid reckless spending. Resist the urge to reinvest in gambling—your win is rare, and the odds are against you repeating it. Use this portion responsibly to improve your living standards or start a small side hustle, like chicken farming or an egg hatchery.
Overall,
Live modestly and avoid funding a lifestyle you can’t sustain. Investments take time to mature, so be patient. Continue learning about personal finance and consult a financial planner to create a tailored plan. Seek advice from a trusted mentor with financial expertise.
If you have side hustles, keep them going as if you hadn’t won the bet. This disciplined approach will set you up for long-term success.
If you have money-related questions, email us at [email protected] with your contact number. We’ll address them in this column.
