DADA by Stanbic Bank.

Most of us hate the big bad B-word. 


It can be overwhelming, draining and outrightly confusing. Sometimes budgeting can make you feel like you don’t have any money left to enjoy. It’s only fair that you spend your hard-earned money however you want because we only live once, right? Well, that’s a dangerous mentality to have, especially if you have people who depend on you. 

Yes, it is your money but do you know exactly where every shilling goes? For most of us, by the time it’s the 15th of the month, we have no idea where our money went. We just don’t have it anymore. Falling into this trap is a sure way of not achieving your financial goals. And while there are a few budgeting rules that are super simple to follow, today, we’ll focus on the 60/20/20 rule.

So what are those numbers and what do they mean?

The 60/20/20 budget rule suggests that 60% of your income goes to essentials, 20% goes to your financial matters and 20% goes to your wants of discretionary spending. 

For example, if our hypothetical friend Stacy earns a gross salary of 50,000 shillings, she’d have at most 30,000 shillings to be spent on her essentials i.e. bills, house shopping, fare and rent, while 10,000 goes to her debts, savings or investments and the final 10,000 goes to things she can get by without,  like date nights or those new palazzo pants she’s been eyeing. 

And why is this a good budgeting rule?

The great thing about the 60/20/20 rule is that it makes sure you don’t blow all your money, forgetting important payments. You also get to enjoy a bit of your money on things you want but not necessarily need. One of our previous articles talked about differentiating between wants and needs. With this budget rule, you have some wiggle room to purchase things or experiences you want. We chose this budget rule because it’s simple and can fit into the planning framework for most Kenyans. 

How can we get started?

First things first: go to your kitchen, make your favourite tea (we suggest chamomile tea because 2020 is for being zen), grab a pen and notebook and write down all your expenses and how much you spend to cover them. Let’s take a look at how our friend Stacy from before would divide her expenses. 

As you can see, Stacy’s got a balance of 4,100 left. She can choose to save this money, invest it in the MMF or buy those palazzo pants and a nice top to match.

A few things to note…

The 60/20/20 rule doesn’t need to be followed to the letter (in this case, number). Like we said in the beginning, it is a guide that can be modified to fit your financial situation and will help you spend wisely and avoid days when you’re too broke to go outside. Approach budgeting with an open mind and check out our website for more tips and tools to improve your financial health and overall wellbeing!