My name is Beth. I am single. I own a cyber cafe, from which I earn at least Sh1,000 on less busy days. The most I have ever earned in a day is Sh8,000. This is usually during the back-to-school season. I would like to go back to school myself and pursue a course in social work. Currently, I have Sh80,000 saved in Money Market Find (MMF). I have been depositing Sh5,000 every month. I also have a Sacco account, which has Sh30,000. I rarely deposit in this account.
My budget is as follows: Business rent: Sh8,000, Wi-Fi Sh2,800, stock: Sh6,000, electricity: Sh1,800. My house rent, food, electricity, and phone expenses are around Sh15,000.
I have a nine-month loan of Sh270,000 with a monthly payment of Sh32,700 (I pay Sh22,700 a month and my mum tops up Sh10,000). I used this loan to buy a better and bigger printer for my business and forwarded some to my mum for her to boost her business. I have been in this business for a long time now, and I am a little tired and want a change, hence the need to go back to school. I want to employ someone at the business because I am planning to do evening classes, but I am afraid of employee theft.
I do not want to close because I have very loyal customers. I work from 8am to 8pm. I am considering moving back in with my mum to save more. I need to know how to plan myself now that I’ll be paying my own fees. I have been postponing going to school since 2021, and now I believe it is time.
Please advise.
Josephine Murage, an investment banker and personal finance consultant
From your breakdown, your monthly expenses total Sh61,300. This is inclusive of your personal expenses of Sh15,000, loan repayments of Sh22,700, MMF remittances of Sh5,000 and business expenses of Sh18,600. You have not given your average monthly earnings from your business other than the Sh1,000 on bad days. This implies that on an extremely low month, the least you will make is between Sh24,000 and Sh30,000 depending on whether you work seven or six days per week.
However, since you have not indicated your inability to meet your monthly budget, we can assume that your earnings are above average. For instance, if you earn half of your high season, you would be making between Sh84,000 and Sh96,000. This would be enough to cover your expenses and leave you with a surplus of Sh22,700. Since these are just estimates, you need to start doing proper bookkeeping to know exactly how much revenue your business generates every month and what net profit is made out of it. This includes your own salary coming out of the business.
Proper bookkeeping system and an analysis of the financial status of your business will give you a clearer picture of whether your business can afford a second employee in the first place. Remember, you are your business’ first employee.
It is commendable that you are considering higher learning to advance your knowledge. Before you commit financially to this undertaking, you will do well to align your finances, life goals, and purpose for the course you seek.
You state that you are now aware of the course you want, which is social work. Why this course? What’s your objective? How much will it cost? How long will it last? Which institution are you taking it from? What level is it? At your age, it is important to be clear on these things, given that you plan to make this course your primary source of income upon graduation. It is also important for you to understand if you want to switch from entrepreneurship to employment upon graduation, or not.
Whereas you are tired of running your cyber cafe and printing and photocopy business, its viability should not be solely based on your boredom but on its market performance. You have an outstanding loan for which the business can repay at Sh22,700. How long before you settle this loan? Once settled, you will free up
Sh22,700 that could be used to boost your MMF monthly kitty and restart your Sacco savings.
You have also invested quite heavily in your business, particularly with your recent machine acquisition. If you drop the business right away, what will become of the equipment you have acquired for the business? Will you sell the business? You have the unique benefit of a business that is making you some profit. If the business is not far from your mother’s home, you may consider the option you propose of moving back home for the interim. This would free up Sh15,000.
Out of this, you can set aside Sh12,000 monthly for your course fees, depending on when you plan to enrol. For instance, if you set an April 2025 enrollment date, and save this amount in your Sacco every month, you will have built up at least Sh126,000 (Sh96,000 plus Sh30,000 already in the account).
However, if you are to enrol in September, you might find yourself digging for funds from your MMF to fund your course which might leave you with little to no emergency money. This MMF should essentially be treated as your emergency fund. Among the schools you have selected, research on the possibility of online evening classes or weekend classes. With evening online classes, you might be able to cut down one hour and operate from 8am to 7pm to make room for your online classes, of you can set a desk at your workplace and log in after daily closure since you have sufficient connectivity established there.
Alternatively, you can compensate for this hour by shifting it to morning, such that instead of 8am to 8pm, you’ll now operate from 7am to 7pm. This will allow you to run your business and still pursue your studies on the sidelines instead of shutting the business down altogether.
Proper personal financial management boils down to the type of goals you set, how achievable they are, and the savings and investment plan that will get you there. For instance, don’t save just for the sake of it, even as you embark on your studies, explore different savings avenues that are available for you.
This includes the MMF which you need to continue with (make sure this is an MMF with a reputable firm offering realistic returns). The Sacco which should give you annual dividends in the acceptable annual range, and other instruments such as Treasury bills. As your savings advance, you may consider other instruments such as treasury bonds, of which there are infrastructure bonds going at upwards of 17 per cent tax-free returns.
If you have any money problems, send us an email at [email protected] and leave your number for contact. Money questions will be answered here.
