How to Budget a 20K Salary in Kenya

To be honest, KSh 20,000 is not a lot of money, especially in this economy. Considering that the average salary in Kenya is KSh 20,123,¹ you will be earning much less than most people. However, if you learn how to budget a 20k salary in Kenya effectively, you might be able to pull through the month.

If you don’t know where to start, I am going to show you a simple method that you can use to ensure you manage your money well. I also provide a sample budget for a 20k salary and some tips to help you survive on this income.

Let’s get started!

How to Budget a 20K Salary in Kenya Using the 50/30/20 Method

The 50/30/20 budgeting method, a widely used strategy, offers a structured approach by assigning percentages to different expenditure categories.

Here’s a breakdown of how you can allocate a KSh 20,000 salary using this method:

• Allocate 50% to necessities
• Allocate 30% to wants
• Allocate 20% to savings or paying off debt

1. Necessities: 50% of Income (KSh 10,000)

Necessities or needs are things that you must pay for because you can’t survive without them. These include:

• Housing Costs (Rent/Mortgage): Allocate a maximum of 30% to 35% of your income to housing expenses. For instance, since your salary is KSh 20,000, try to keep your rent below KSh 7,000 to prevent financial strain.
• Utilities: Factor in electricity, water, and gas expenses. Ensure you track usage and adopt strategies to minimize costs, such as using energy-efficient appliances and being mindful of water usage.
• Transportation: If you own a vehicle, budget for fuel, maintenance, and insurance. Otherwise, allocate funds for public transportation fares or consider carpooling to manage commuting expenses efficiently.
• Groceries and Food: Dedicate a portion of your budget to groceries and essential food items. Plan meals, create shopping lists, and explore cost-effective options to save money, prioritizing home-cooked meals over eating out.

Other examples of necessities include:

• Basic Clothing
• Minimum Debt Payments (Credit cards, loans)
• Childcare Expenses
• Prescription Medications
• Basic Household Supplies (Toiletries, cleaning products)

2. Wants: 30% of Income (6,000 KES)

Wants are expenses that help to make your life more comfortable but you can do without. They include:

• Entertainment and Leisure: This category includes expenses for entertainment, dining out, hobbies, and subscriptions (like Netflix). Allocate a reasonable amount for leisure activities while ensuring it remains within the 30% limit of your income.
• Personal Expenses: Budget for personal grooming, clothing, and non-essential purchases such as a new phone or watch. Prioritize items based on necessity and value while avoiding overspending in this category.

Other examples of wants include:

• Dining out at restaurants
• Entertainment (Movies, concerts, theme parks)
• Subscription services (Streaming platforms, gym memberships)
• Travel (Vacations, weekend getaways)
• Hobbies (Crafting, gaming, sports equipment)
• Designer Clothing and Accessories
• Electronics (New smartphones, gaming consoles)
• Luxury Items (Jewelry, high-end cosmetics)
• Spa Treatments/Massages
• Home Decor and Furnishings

3. Savings and Debt Repayment: 20% of Income (4,000 KES)

The final 20% of your income should go to paying off debt or saving. If you have a high-interest debt, you should prioritize paying this off to avoid accumulating more debt. On the other hand, if you have a friendly debt (low or no interest) you can use some of the 4k to pay it while the rest go to savings.

Here’s where you should allocate the 20%, that is KSh 4,000.

• Emergency Fund: Start building an emergency fund to cover unforeseen expenses. Even a small amount each month can grow over time, eventually covering several months’ worth of living expenses.
• Debt Repayment: If you have outstanding debts like loans or credit card payments, allocate a portion of your income toward repaying these debts. Paying more than the minimum amount due can help reduce interest and expedite debt clearance.
• Long-Term Savings: Allocate a segment of this 20% towards long-term goals like buying a house, education, retirement, or investments. Regular contributions will gradually build a fund to support these aspirations.

Sample Budget for a KSh 20,000 Monthly Salary

To help you understand how you can budget a 20k salary in Kenya using the 50/30/20 method, let’s look at an example. The table below shows how you can allocate your salary to cover different expenses under the three main categories we have discussed above.

Category	Expenses	Amount
Needs (50%) – KSh. 10,000	Rent or mortgage payment	KSh. 5,000
	Utilities (electricity, water, internet)	KSh. 1,800
	Transportation (fuel, public transportation, maintenance)	KSh. 900
	Groceries	KSh. 1,000
	Health insurance	KSh. 500
	Personal care (toiletries, grooming)	KSh. 800
Wants (30%) – KSh. 6,000	Dining out and entertainment	KSh. 3,000
	Shopping and clothing	KSh. 2,000
	Personal discretionary spending	KSh. 1,000
Savings and Debt Repayment (20%) – KSh. 4,000	Emergency fund	KSh. 2,000
	Debt repayment (loans, credit cards)	KSh. 1,000
	Long-term savings and investments	KSh. 1,000

This sample budget aims to distribute the income based on the 50/30/20 method, effectively managing essential needs, discretionary spending, and savings for the future. You can adjust the budget based on your individual circumstances and priorities to align with your financial goals.

Also, ensure to regularly review and adapt the budget so it remains in line with your financial objectives and any alterations in income or expenses.

Tips to Manage a 20K Salary in Kenya

As I mentioned, 20k is not a lot of money in Kenya and you will need to be careful how you spend it. Most people who earn this salary often live paycheck to paycheck because they don’t know how to manage their money.

So, on top of creating a budget, here are other strategies you can use to ensure the salary sees you through the month.

• Track Your Expenses: Monitor spending meticulously to understand where your money goes. For this, you can utilize budgeting apps or spreadsheets to categorize expenses and identify areas where you can cut costs.
• Optimize Housing Costs: Keep rent within 25% to 30% of your income. Always look for affordable housing options or consider sharing accommodation to reduce costs.
• Smart Transportation: Utilize cost-effective commuting options such as public transportation, carpooling, or biking to lower transportation expenses.
• Budget-Conscious Groceries: Plan meals, create shopping lists, and shop in affordable grocery stores or markets to save on food expenses.
• Control Entertainment Expenses: Allocate a specific amount for leisure activities and entertainment, ensuring it aligns with the 30% limit of your income. Even better, you can look for free or low-cost leisure options.
• Mindful Personal Expenses: Budget for personal grooming, clothing, and non-essential purchases. Prioritize needs and consider second-hand or discounted options to manage expenses.
• Build an Emergency Fund: Start small and gradually build an emergency fund to cover unexpected expenses. Even small contributions each month can lead to a substantial fund over time.
• Debt Repayment Strategy: If carrying debt, allocate a portion of your income to clear high-interest debts first. Negotiate lower interest rates if possible to reduce the financial burden.
• Long-Term Savings: Allocate a segment of your savings towards future goals like education, buying a house, or retirement. Consistent contributions, no matter how small, can accumulate over time.
• Consider Side Hustles: Look for part-time jobs, freelance work, or small business opportunities that complement your skills. Earning extra income can significantly supplement your salary.
• Financial Flexibility: Be open to adjustments as circumstances change. Regularly reevaluate your budget to accommodate any alterations in income or expenses.

The Bottom Line

Without a good budget, surviving on a 20k salary in Kenya can be very difficult. So, make sure that you plan for your money well and avoid temptations to overspend.

While you will still struggle with this salary, creating a budget makes things more bearable and affords you a chance to pull through the month without accumulating debt.

1. Business Daily, Kenyans’ average monthly income climbs to Sh20,123