Which are the common mistakes middle class people make in Kenya?
As salaries stagnant, the middle income earners continue to make mistake after mistake. This population, which earns a median pay between Ksh 50,000 to Ksh 150, 000, define their future in a less cautious lifestyle.
Mistakes are common, but when it comes to spending, elimination of life-changing mistakes is critical. Here we pinpoint the worst/common mistakes the middle class make in Kenya that eventually put them into unending suffering.
- Too much debt
Middle class especially town dwellers have a tendency of taking bank loans. It’s not uncommon to find an individual who is servicing a mortgage loan, soft loan, HELB loan and car loan concurrently. These loans have put millions of people in a mess.
It’s not a crime to take a loan but when the loan is taken to buy depreciating items like personal cars, clothes and house hold goods, becomes a target of poverty.
- Not having an emergency fund
Emergency fund is crucial to anyone who wants to cater for emergency cases. Majority of middle class population have a tendency of utilizing their salary to the last coin. Assuming the trend continues until one retires, what do you think will happen to this person upon retirement?!!
- Not saving enough for retirement
It’s a norm that more than 90 % of the middle class in Kenya only save in the NSSF.By doing so, they limit chances of having a decent life after they attain retirement age.
It’s advisable to save as much as possible to a pension scheme or provident fund. In case you lose your job, you can apply for the funds in a pension scheme.
- Not having a side hustle
Honestly, if your monthly pay is Ksh 50,000 I don’t see how this money will sustain you until you save considerable amount for future use. Having a side hustle will not only save you the shame of losing a job, but also ensure you get extra income to put into investments.
- Spending more than half on rent
This is like a trap! Most town dwellers spend more than half of their income on rent. In this scenario, little is spared for saving. A middle class person in this bracket is a slave of his employer and landlord .This person is often insecure and not ready to take risks because he fears his life can take a dip in case he loses his job. A mistake of this kind will make life stagnate and eventually the bearer becomes a shadow of his former self after retirement.
- Not having a medical cover
An insurance medical cover is extremely important for middle class population. If you make a mistake of avoiding a cover and one of your members get diagnosed with a cancer, diabetes or hypertension, your bank account will be depleted faster than you can blink. It’s a good idea to spend Ksh 5,000 every month and avoid health related costs than wait until a major health issue is detected in your family.
- Giving birth to many children
Middle class have a tendency of giving birth to more than two children. They even go ahead to marry a second wife. This is a serious mistake that can sink one into poverty.