Simon Mburu, a 24-year-old who has recently secured employment in Rubaga, Kampala, with a monthly net salary of UGX 500,000, seeks guidance on budgeting and achieving financial independence. Facing the challenges of living in an expensive city on a modest income, Simon aims to not only cover his basic needs but also save for the future and explore potential side hustles.
Understanding Your Financial Landscape:
Simon plans to reside in the affordable areas of Ndeeba or Nateete, minimizing housing costs. His contract is set for one year, with the possibility of extension. He aspires to build savings and initiate a side business, such as a car wash, should the contract not be renewed.
Budgeting Strategies:
Financial expert Erias Makuka suggests adopting the 50:30:20 rule, where 50% of income covers basic needs, 30% caters to wants, and 20% is allocated for savings. In Simon’s case, this translates to allocating UGX 250,000 for basic needs, UGX 150,000 for wants, and UGX 100,000 for savings.
Budget Allocation Breakdown:
- Basic Needs (50%):
- Rent: UGX 6,000
- Utilities: UGX 8,000
- Monthly Shopping: UGX 2,500
- Transport: UGX 2,500
- Remaining Cash: UGX 500,000 – (6,000 + 8,000 + 2,500 + 2,500) = UGX 481,000
- Wants (20%):
- Entertainment, charity, clothes, etc.: UGX 5,100
- Savings (30%):
- Invest UGX 7,650 in a Money Market Fund or Bond fund, yielding approximately UGX 96,000 by the end of 2024.
Total Monthly Allocation:
- Basic Needs: UGX 19,500
- Wants: UGX 5,100
- Savings: UGX 7,650
Side Hustle Recommendations:
Given Simon’s aspirations for a future car wash business, Erias suggests starting with low-capital ventures like selling shoes, clothes, or tech items. Additionally, he encourages part-time jobs, like weekend car wash gigs, to gather insights before investing significant money.
Long-Term Financial Planning:
If Simon’s contract isn’t renewed, having a growing side business can provide stability while seeking new job opportunities. If the contract extends, consistent savings and investment can pave the way for more significant ventures like a car wash or homeownership.
