5 Tips On How To Manage Your Money When You Start Earning More

By Elizabeth Benu

“I was recently offered a job opportunity at a local advertising firm in Nairobi. As the new graphic designer for the company I am earning Ksh. 30,000 more than my previous salary. I am not used to a lot of money considering I am only 25 years old and I am seeking advice on how to manage from my low salary to my current higher salary,” writes Johnson Murimi in an email.

For most of us having a bigger and better salary means a larger lifestyle but whichever the case, overspending will see you in debt or something worse. That said; if you were in the same position as Johnson what would you do?

Boniface Njuguna, a Financial Analyst at East Africa Breweries Limited, says that, “It is important to understand that this is not an easy thing. Having a better salary comes with various temptations to overspend or make the worst financial decisions in your life.”

With that he offers 5 tips to keep you at bay while you recover from the excitement:

1. Sign up for a check off

Mr. Njuguna defines a check off as a mechanism which provides for regular payment of an obligation such as a savings account or a Sacco contribution.

“In Johnson’s case he may assign Kshs. 20,000 for the check off and add the remaining Ksh 10,000 raise to his monthly budget. This allows for tracking of your money and it also restricts you from overspending,” he explains.

He is also quick to add that a check off is a way of saving that can give you a boost during an emergency moment in your life such as offsetting a large medical bill or even losing your job unexpectedly.

2. Reward yourself

“What would be the use of having a large salary and having to live a miser’s life?” poses Mr. Njuguna.

“Rewarding yourself does not necessarily mean that you take an overseas trip with a shop-till-you-drop mentality. It simply means; thanking yourself for working hard to get to that point. The advantage of this is that it makes you content and you can continue with your life normally feeling appreciated,” he adds.

3. Think of investment ideas.

“Now that you have money into a savings account, do not let it sit idle. After you have established a solid financial base start making investments with it. It keeps more money coming into your account,” he says.

4. Stick to your original budget

“It is a common mistake for people to expand their budgets to fit with their new salary. I do not advocate for this because it adds unnecessary expenses on to your budget. Sticking to that budget restricts you from overspending,” he adds.

5. Do not show everyone your pay check

“With the excitement you may probably let your family and close friends in on your paycheck amount. While it may sound okay to share in your achievements it brings problems. You now have everyone borrowing money from you and not refunding it since they already know the amount in your account,” explains Mr. Njuguna

What advice does he have for someone experiencing the same?

“There is a lot ahead in life so work to better your financial security. Remember that to whoever much is given more is expected of him, so manage yourself right now and avoid regrets later,” he concludes.

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