How to Manage Your Finances in Kenya With Irregular Income

Managing your finances with a budget that changes from day to day, week to week, or month to month is an uphill battle. This is because most bills are constant, and with regular inflation, managing an irregular income is twice as hard. 

Wondering how you should manage your finances with irregular income? Here are some tips on how to manage your finances in Kenya with irregular income.

1. Budget Based on Your Lowest Income

With an irregular income, it is quite tempting to budget as if your income will always be high. The truth is that you will always get months when your income is very low.

The best thing to do is to budget based on your lowest income. If you don’t have the correct figures, it’s now time that you grab your notebook and pen.

List down how much you have earned for the past five days to get the lowest. If it is your first time to start earning an irregular income, be keen on tracking your income.

Also, if you are working in Kenya as a freelancer, chances are that you receive your payments through your mobile money platforms like Mpesa. The good thing about this is that you can ask for an MPESA statement that will help in determining how much you have earned.

With this, you will always have your major bills covered. This way, you can later adjust the budget when you have a good income period.

Find Out: 10 Best Money Market Funds In Kenya

2. Budget for Your Regular Outgoings

You might not be clear on how much you are getting each day, week, or month, but you should know how much is going out. To start, you should list all your important and regular outgoings.

Your list may be something like this;

  • Rent
  • School fees
  • Food and groceries
  • Internet
  • Water bill
  • Electricity bill e.t.c

With a list of your important and regular outgoings, you can see where you need a cut back.

3. Track All Your Expenses

One big secret about effective budgeting is tracking down every coin. Once you have a budget in every outgoing, you will be in a better position to track your spending and income.

Here’s what it means: if you buy something, subtract it from your big bill. For instance, if you buy some snacks, subtract them from your snacks budget. This might also help you to avoid misusing money. 

Also, when you earn some money, add it to your already-used budget. This needs a lot of discipline, but try as much as possible to track every coin.

Also Read: List Of 15 Best Performing SACCOs In Kenya And Their Dividends

4. Have an Emergency Fund

From reducing your anxiety levels to helping you have a savings culture, an emergency fund is full of amazing perks. An emergency fund is simply a type of saving that’s kept aside to cater for unplanned emergencies.

Something unique about irregular incomes is that there are times that you don’t spend much of it. There are times when you have a very high income.

During this time, resist the urge to spend the extra cash. Instead, you can aim to save up the extra cash as an emergency fund. You can aim at having an emergency fund that amounts to a full month’s budget.

5. Consider the High Budget Months

What are these high-budget months? These are months when you have to spend on your bills, especially water bills, electricity bills, and food bills. 

These bills may increase unexpectedly, especially if you have guests or when your kids are on holiday. Seasonal times such as Christmas and birthday months can double up your budget.

When budgeting, consider budgeting for these months in the beginning. 

6. Create a Big Cash Cushion

Ensure that you have a large cash cushion. This allows you to pay your bills when your jobs are low or when your customers delay payment.

You don’t have to create this all at once, but you can consider putting aside money every time you are paid. The cash cushion will allow you to be stress-free when your income is low.

7. Budget for Every Income

You might be getting your income every day or every week. No matter when you receive payments, ensure that you budget for every coin. You can use the famous 5-30-20 budgeting rule. 

This rule suggests that 50% of your income should go to your needs, 30% to your wants, and 20% to paying debts or savings. Right after you receive your payments, you can split the cash into the different categories in your bills.

Budgeting your every income helps you avoid wasting your income on other unnecessary wants. You are also able to keep track of where your income mostly goes.

8. Consider Investing in Other Places

It might be difficult to contribute towards your investment every payday, but you can try investing regardless. This allows your money to grow, and you will eventually get a higher amount when you choose to withdraw.

Consider investing in other passive income platforms for your money to grow. This allows you to keep up with your cash and be able to grow it.

Some of the passive income platforms you can invest in include:

  • Money Market Funds
  • Fixed savings accounts