For the mainstream population, the words Nairobi and Affordable are a juxtaposition. This means that if you want to live in Nairobi you have to sacrifice luxury and convenience to end up with some savings or live your best life (within your means of course) and end up with little to no savings. While the cost of living in Nairobi pales in comparison to places like New York by a whopping 61%, Nairobi still holds its own when it comes to how well you can live while working and living in the city. Salary allocation towards needs, wants and savings in the 50/30/20 ratio respectively also comes into play. We look at how best we can dedicate specific amounts to various expenses and which category they subsequently fall into.
According to Payscale.com, the average monthly salary in Nairobi is Kshs. 64,500 while the cost of living per person amounts to Kshs. 56,132 monthly excluding rent. For purposes of this article, we shall assume that the amount in question is your salary after tax. Adding rent to this skyrockets the figure 26% more than your salary. Not only is this not feasible, but it is also a sad reality for Nairobi residents. So what makes Nairobi expensive and how can we better manage our finances while living in the city to ascertain a comfortable life, manage our personal finances better and put money aside for a rainy day?
As a single person in Nairobi, how do you make the most of your salary and manage to live comfortably and maybe even be able to put a few savings aside? We have outlined a few areas in this regard;
Rent - The first major factor is rent, obviously becomes where will you stay? On average, Rental fees in Nairobi stand at Kshs. 43,500 & 92,500 for a 1 and 3 bedroom apartment respectively within the city Centre as at March 2020 as opposed to 19,000 & 44,000 outside of the city Centre. The closer to Nairobi’s commercial areas (CBD, Westlands, etc.) you choose to stay the higher the charges are. Areas such as Roysambu, Ruiru, Ruaka offer proximity to the city Centre without compromising on comfort and the equivalent transport costs don’t offset the savings made with the choice in housing.
Transport - Assuming that the average cost of public transit per day amounts to Kshs. 200 a day and the number of times you go to work during the month is equivalent to 23 then the estimated amount would be Kshs. 5,000.
Groceries - Groceries and monthly shopping would not take much out of your salary as a single person living in Nairobi, however, to cut down on costs, it is advisable to get your food items from the local markets as they are significantly cheaper.
Lunch - The best bet for lunch is to carry packed food from home. It’s inexpensive and saves you both time and money. However, if you are not a fan of packed lunch for one reason or another then lunch should be limited to about Kshs. 200 daily and if you really want to save, there are small food kiosks (kibandas) that offer food much cheaper.
Household Utilities - The total amount spent on household utilities such as the water bill, electricity bill, and garbage disposal would be around the Kshs. 3,000 range unless you are running a small factory from your apartment.
Internet - The Internet is a major staple to most homes, it can afford you the added benefit of entertainment and work from home hence saving on transport. With the internet, you also get to relax at home, watch movies, and read articles expanding your scope to the outside world. There are various home internet options to choose from and a basic home connection with TV costs about Kshs. 4,500
Mobile Phone Charges - Mobile phone operators in Kenya give the option to bundle up voice, messaging, and internet to a monthly figure depending on your needs and usage. This is better than using airtime as you go since it is a fixed figure.
Entertainment - When it comes to entertainment, there isn’t a one size fits all approach. Entertainment is very subjective and hence depending on yourself, you can forgo certain luxuries and spend more on entertainment but we have kept the figure at a bare minimum of Kshs. 2,500.
Health Insurance - Do not believe anyone who tells you that health insurance is unnecessary. Health Insurance is vital, end of story. Medical insurance covering up to Kshs. 1,000,000 inpatient and Kshs. 50,000 minimum outpatient, the premium per annum is usually about Kshs. 50,000 which translates into roughly Kshs. 4,200 Monthly.
Savings - This brings us to the holy grail of finance, the mythical item that all Nairobians wish they had but have resigned to a life without, savings. We all know it is important to save but with life throwing curveballs at you left, right and Centre; knowing and doing become distant relatives only aware of each other but never really materializing.
Cost of Living as a Percentage of Income
By following all the outlined steps above, there should be a significant amount of your income set aside for savings. This can be further invested, channelled into capital for a business, or even put aside for retirement and thus making you a smart, young individual investing in a better tomorrow.
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