How to Survive on Ksh 20K Salary After Ruto Signs Finance Bill Into Law

An aerial photo of Nairobi CBD.
An aerial photo of Nairobi's Central Business District and its surroundings.

The Finance Bill 2023 ignited mixed reactions nationwide, with stakeholders supporting or opposing the tax proposals amid President William Ruto's efforts to calm the nation. 

Ruto, on Monday, June 26, signed the Bill into law despite the opposition vowing to carry demonstrations after its Tuesday, June 27, Kamukunji Grounds rally. 

From a 15 per cent digital tax, a 3 per cent housing levy, and remitting rental tax within 24 hours, to the introduction of intellectual property income, the tax hike will significantly affect an employee's pay slip

Further, the Bill proposed an increase in the Pay As You Earn (PAYE) from 30 to 35 per cent for those earning over Ksh500,000.

According to the latest statistics from the Kenya National Bureau of Statistics (KNBS), the average monthly income for Kenyans stands at Ksh20,123 as of December 2022.

A model payslip for a Kenyan earning gross pay of Ksh20,000.
A current model payslip for a Kenyan earning gross pay of Ksh20,000. Note: This is before the passing of the Finance Bill 2023.

Critics of the Bill opined that if passed into law, it would hurt the economy by overburdening the working class.

On the other hand, proponents countered, stating that the Bill would benefit the economy in the long run. Ruto aims to create millions of employment via the housing fund and shift the country from overreliance on foreign debt. 

How does the bill affect an employee's payslip post deductions, and how can you adjust your budget? 

Professor Iraki, Associate Professor, Faculty of Business and Management Sciences, University of Nairobi, spoke to about prudent measures to survive on a Ksh20,000 monthly salary.


One of the most important measures to take is to cut down on costs, especially rental expenditures. 

The 30 per cent rule comes to mind. It stipulates that one should only spend 30 per cent of their monthly income on rent. For those earning Ksh20,000, this translates to Ksh6,000 per month. This should include your utility bills, from water and electricity to garbage. 

Depending on the location, the amount can guarantee a bedsitter, studio or a Servant Quarter. An important factor to consider, according to Professor Iraki, is the distance from the city.

"Rent is a big problem. Locate to a cheaper place but remember fares increase as you move away from the city," he advised. 

One can also move in with a roommate to split expenses. Residing near the workplace is also an ideal option to maximise your savings. However, this consideration does not apply to employee working in rich suburbs such as Westlands, Kilimani, Gigiri and Hurlingham. 

Nonetheless, you can stay along the route to work. For example, those working in Westlands can stay along Waiyaki Way in estates such as Uthiru, Kinoo and Mountain View or Kahawa West, Kahawa Wendani and Roysambu for those hustling in Ngara and its environs. 

An aerial view of Nairobi City.
An aerial view of Nairobi City.
Kenya Pics


American business magnate, Warren Buffet, once stated: Do not save what is left after spending, but spend what is left after saving.”

Financial experts advise employees to save at least ten per cent of their money - which, in this case, is equivalent to Ksh2,000 monthly and Ksh24,000 annually. An alternative is to invest the funds into chamas and other cooperative societies.

Professor Iraki advocated for one to cut down on miscellaneous such as eating out and instead cook meals at home. 

"You only save what you have! Save something but see if it’s earning you something," he pointed out.

Stick to a Budget

It is advisable to stick to a budget to avoid living beyond your means. Avoid indulging in expensive habits such as takeouts, impulse buying, and an excessive party lifestyle.

When one fails to plan, they run out of cash and, in turn, take loans from friends or lending apps to survive.

"(United Kingdom's former Prime Minister) Winston Churchill once stated that the most important thing is to think of how you can make more money. Never waste a good crisis," Iraki opined, advocating for employees to focus on earning passively to supplement income

Track and Record Your Spending

Always remember to save receipts, tickets and bank statements for calculation. This information comes in handy when drawing comparisons within your budget.

Look for cost-effective measures to solve a particular problem. For instance, make a phone call instead of visiting someone far away, purchase items on offer, and buy groceries at food markets instead of supermarkets.

Examples of such food markets include the Marikiti market, Kangemi market, Wangige market, among others. On the other hand, Kamukunji markets, in Eastleigh are favourable places to visit to acquire affordable household items.

A photo of a supermarket shelf in Kenya.
A photo of a supermarket in Kenya.

Inflation Rate 

According to the latest KNBS data, Kenya's inflation rate rose to eight per cent in May 2023. 

In particular, housing, water, and electricity prices rose due to the increased cost of petroleum products. Petrol, diesel and kerosene retailed at Ksh183.29, Ksh169.10 and Ksh161.83 per litre, respectively, between May and June 2023. 

KNBS also indicated that sugar prices doubled from an average of Ksh200 for a 2-kilogram packet to Ksh420.

Unga currently retails between Ksh205, with traders projecting it to rise as high as Ksh260.