12 tricks to help you save and reach your financial goals faster

There is always an opportunity to save money to help you reach your goals faster. Here are some tricks you can use to help you save a little bit more if you are having difficulties finding money to save or in addition to your regular savings schedule 

1. Save automatically before you spend. 

When you get your income, before you do anything else, deduct your savings and put them into a savings account. To make it even easier, set up a check-off system from your employer (payroll department) to a money market fund or Sacco savings account or set up a standing order from your current/salary account to a savings account so that money is deducted automatically from your main account and transferred to your savings account before you touch it. Saving automatically is the best way to save without a struggle. 

For those who pay income tax (pay as you earn/PAYE), doesn’t the government take off 30% or so before you even touch your salary? And after the government and NHIF, NSSF, insurance, loans and everyone else has taken their cut, they leave the rest to you and you learn how to budget around it. Why not include yourself in the group of people who get their cut first, before you distribute what is left to your landlord, school and all those other people who are waiting for a chunk of your income? 

If you say that you will save after you have finished paying the bills, you will never have any money left to save, so prioritise and automate your savings. 

2. Save your loose change. At the end of every day, I empty my purse and divide the various coin denominations I find in there into two. For example all 10 bobs are put into two piles, then all 20 bobs and all 5 bobs. The first pile goes back into my purse, and the second pile goes into the piggy bank I use for saving coins. When it fills up, I top up if I need to and transfer it to my money market fund account.

 

3. Save all 50 bobs or all 100 bobs that pass through your hands. Just like in (2) above, you can decide to save all the Sh50 or Sh100 or any other denomination of your choice that pass through your wallet. 

4. When you finish paying off a loan, don't stop. What do I mean? Take that money you've been paying a loan with and set up an automatic standing order to a savings account or set up a check-off system to a money market fund. So say you've been paying Sh5, 500 for a loan every month and you have just finished paying your loan, instead of finding ways to spend that Sh5, 500, start saving it, preferably using an automatic standing order or check-off system. If you save that Sh5, 500 you used to pay your now paid-up loan with for 12 months, you will have Sh66, 000 to help you reach your savings goals faster. 

5. Save your salary increment. If you get a raise (salary increment) at work, instead of adjusting your budget/lifestyle upwards to absorb that money, continue living on the same amount you were living on before (as if you are still earning the old salary) and save the extra amount your employer has given you. So say you get a Sh6, 000 raise, you can set up a standing order to save that money automatically and in 12 months, you’d have Sh72, 000 in savings. This is the same principle in number (4) above. 

6. The same applies to if you “find” money. Finding money means getting money you were not expecting, such as a refund, a discount, reimbursement of costs by your employer, or even finding a Sh1, 000 note in a trouser pocket you had forgotten long ago. Instead of using that money, put it directly into your savings account without second thought. 

7. Save your lunch money. Carry lunch to work a few days a week and save your lunch money. For instance, if you usually buy lunch at work for Sh300, you can decide that on Mondays and Thursdays you will carry lunch from home, so that week, you save Sh600 and put it into your savings account. You could decide to carry lunch three days a week, so that week you'll save Sh900. You could decide to carry lunch the whole week, so that week you'll save Sh1,500 or more.

 

8. Save your fuel. You could do the same with your car. If public transport is cheaper than using your car, you could decide that three days a week, you'll take a matatu home and save the amount you would have spent on fuel on those three days. You could also decide that that whole week, you'll take a matatu and put the amount of money you would have used on fuel into your savings. 

9. Do a spending fast. In religious circles, to fast is to abstain from food/eating for a specified period of time during which one says fervent prayers for a specific purpose. You can apply this principle to personal finance to help you save. This is basically the principle behind point (5) and (6) above and it basically means cutting off everything that you don’t need to survive and saving the money that you would normally use on the non-essentials. 

To be able to do a proper spending fast, you have to first know where exactly all your money is going -- every last coin -- so first track your expenses for a month and then evaluate what you actually need (essentials/things that you honestly cannot live without) and things you can actually do without. 

Once you see where exactly your money is going, you can cut back on the non-essentials and the money you save by not spending, should go directly to your savings account. This could mean carrying lunch instead of buying lunch every day (if you carry lunch from home for a full month, and you usually spend Sh300 on lunch every day, you’ll be able to save Sh6, 000 or more that month. Put it into your savings account). You can also cut back on coffee and alcohol, you won’t die without them (unless you are addicted). Say you spend Sh3, 000 on alcohol every weekend, if you decide to reduce that amount to Sh1, 000, you will save Sh8, 000 that month. If you decide to do an alcohol-free month, you will save Sh12, 000 that month. You can even decide to do without DSTV for a month, you won’t die from not watching pay TV. 

I’m not saying that you shouldn’t have fun; saving is not all gloom and doom; on the contrary, if you learn how to optimise your spending, you will not only have more fun and less stress, but you will also be able to achieve those things you only used to dream about, but thought that you could never afford them. 

Secondly, if you do your spending in moderation and do your spending fast for limited periods of time (rather than forever -- that would make you a miserable miser), you will find money to boost your savings. (We’ll talk about having fun while still being able to save in another post.) 

10. Carry only the exact amount of money you need. This goes hand-in-hand with the spending fast. So say my fare is usually constant at Sh200 for the trip to work and back and I use Sh200 for lunch, that day I will carry exactly Sh400 in my purse or Sh500. I will make sure that my Mpesa balance is zero (and resist the temptation to opt into Fuliza), that my bank accounts are not linked with mobile money, so I can’t transact from my phone, that I don’t carry ATM cards, etc. This means that even if I am tempted to buy things on impulse, I simply cannot because I don’t have any money on me to spend. (We’ll tackle impulse buying in another post). 

11. Round it up. When you buy something and the cost does not end in 0 (zero), save the amount of money it would take to get the cost to end with 0 (zero). For example, if you buy something costing Sh42, put the 8 bob change in a piggy bank or transfer an equivalent amount to your Mshwari Lock account. If you use a piggy bank, when it fills up, you can transfer the full amount to your savings account or money market fund. 

12. Lastly, make it difficult to access your savings. A savings account without a debit card (ATM withdrawal card) and with limited withdrawals, is best. I have a Sacco savings account that only allows you to withdraw money at the end of the year. 

I have a money market fund account where withdrawing money takes like three days and where the first withdrawal is free, but subsequent withdrawals are charged Sh1,000 per withdrawal. 

When I think of paying Sh1,000 to withdraw, I just let my savings be unless I have actually accumulated the exact amount I need to meet a certain goal, then I can withdraw and pay for my goal without feeling the pinch. So do whatever it takes to create a barrier between you and your savings, to make it hard for you to withdraw your savings anyhow and any time. You are saving for a purpose and you cannot achieve your financial goals if at all you can withdraw your savings randomly to buy things on a whim. 

I hope these tips help you save more money, and if there are additional tips you use, please share in the comments. Happy saving! 

*These tips were first shared in the 52-Week Savings Challenge Kenya in 2016

How to file your income tax returns on iTax in ten easy steps

 When iTax was introduced a few years back, I was very clueless about it and after lots of frustrations trying to understand how to do it, I ended up filing manual income tax returns.

 Still reeling from the frustrations of the previous year, last year I paid someone to do it for me, but this year, I was determined to do it myself and to do it way earlier than June, so I got a friend to walk me through in April (thanks, Peter!) and discovered that it was a very simple process.

They say that the best way to get a lesson to stick, is to teach someone what you've been taught, and I have found this to be true these last few days while showing people how to manoeuvre the iTax system, and in the process, I have also learnt a lot.

I'm writing this post to be able to share what I have learnt and also as a point of reference for the coming years (sometimes memory fails me). This is in reference to filing income tax returns for 2015 in 2016, but it applies whichever year you need to use this guide. So without further ado, let me take you through the process of filing your income tax returns on the iTax system, with a bias on employed, unemployed/students and Kenyans who live abroad. Then I'll handle the FAQs in another blog post. Here we go:

Please note that all Kenyans over 18 are supposed to have a KRA PIN and are supposed to file returns every year, whether they have a job or not (yes, even students must file (nil) returns.) If you fail to file returns, or file them late (after the 30th June deadline), you will be fined Sh10, 000 or 25% of the tax due, whichever figure is higher.

THINGS YOU NEED

If you are currently employed, you need:

• P9 form – get this from the payroll/accounts department of the employer whom you were working for in 2015. If you had more than one employer in 2015, get the P9 forms from all the employers you were working for in 2015. If you are jobless, but you were working last year, get this from your 2015 employer.

• KRA PIN number – find it on your pay slip or ask your payroll accountant to tell you or get it from KRA by sending a scanned copy of your national ID and requesting for your PIN number. You can reach KRA through their iTax centres around the country, through Huduma Centres around the country, on Facebook or via email callcentre@kra.go.ke or telephone (020) 4999 999, 0711099 999.

• iTax website https://itax.kra.go.ke/

If you are unemployed and were still unemployed in 2015, you need:

• KRA PIN number – find it on your pay slips from your former job or get it from KRA by sending them a scanned copy of your ID and requesting for your PIN number.

• iTax website https://itax.kra.go.ke/

If you were not living/working in Kenya in 2015, you need:

• KRA PIN number – find it on your pay slips from your former job in Kenya or get it from KRA by sending them a scanned copy of your national (Kenyan) ID and requesting for your PIN number.

• iTax website https://itax.kra.go.ke/

STEP 1

Go to the iTax website https://itax.kra.go.ke/  and log in (Enter your PIN number and click continue, enter your password, do the calculation and get the correct answer and enter it in the relevant space [security stamp] then click log in). If you can’t remember your password, click on “forgot password/unlock account” and check your email for the new password. 

STEP 2

Once you log in, this is the page you will get.

If you were unemployed for the entire 2015 (January to December) click on “returns” on the red menu bar (circled in yellow) and choose the fifth option “File NIL return”. Fill in the dates: from 01/01/2015 to 31/12/2015 and the other relevant info except “wife PIN” (unless you are also filing returns for your wife), then click submit. You are done. Wait for next year to file nil returns again if you still remain unemployed the whole of 2016. If you get a job, even for a few months, you’ll need to file returns next year.

If you were not living/working in Kenya for the entire 2015, also file nil returns, just like the people who were unemployed.

If you were employed in 2015, whether for a few months or the full year, click on returns on the red menu bar (circled in yellow) and choose the first option which is “file returns”

If you have already filed 2015 returns, but you need to change something, click on returns on the red menu bar (circled in yellow) and choose the third option which is “file amended return”.

 

STEP 3

KRA has already filled the first two options for you, so just click on the drop down arrow on the third option “tax obligation” and choose the relevant choice. For most people that is the first option “Income tax – resident individual”. Click next.

Income tax – rent income option is for landlords who are paying tax on rent collected.

STEP 4

Download the Excel spreadsheet by clicking on it, it will open as a ZIP file. Double-click on the Excel spreadsheet inside the ZIP file to open it. Keep your P9 form at hand because you will need to fill the information on it on the Excel spreadsheet.

STEP 5

First things first, click on “enable content” on the yellow line at the top of the Excel sheet, so you can be able to fill in the form.

At the bottom, you’ll notice that there are six Excel sheets and the first one is the one you are on right now. It is called “basic info”. Fill in all the relevant details and scroll down to fill in the rest of the details if you have a landlord and if you have a tenant and if you are an auditor (most people don’t need/choose not to fill these landlord/tenant/auditor details). 

Please note that for every field you choose yes, a new sheet will appear at the bottom of the Excel sheet requiring you to give more details. You can only fill in the parts that are white and not the charcoal gray parts. Be sure to fill in every field marked with a red asterisk (*). When you are done with the “basic info” sheet, move on to the next sheet titled “F_Employment Income”.

 Keep your P9 form at hand because you need it to fill the remaining Excel sheets. This is how a P9 form looks. It is not usually blank, it usually has the figures you need to fill in the KRA Individual Resident Return form on Excel.

STEP 6

Keep your P9 form close. You need it to fill in the gaps on this sheet titled “F_Employment Income”. Fill in the PIN and name of your employer from your P9 form. Under “gross pay” write the figure you find at the bottom of “COLUMN D” in your P9 form. Most people don’t have allowances and benefits, net value of housing or pension in excess of 300, 000, so fill in zero (0) in those boxes and move to the next sheet titled “Details of PAYE Deducted”

If you had more than one employer in 2015, you'll have more than one P9 form (get them from the respective former employers, payroll department). Include the details from each employer in separate rows (You can add as many rows as the number of employers you had in 2015 and fill in the relevant details using the relevant P9 forms). 

  Please note that when you are filling the Excel sheets, you cannot "cut and paste" you have to fill in manually.

STEP 7

You still need to use your P9 form, so keep it close. 

Open the sheet titled “Details of PAYE deducted”. This is the third sheet on the Excel spreadsheet.

• Fill in the name of employer from your P9 form and the employer’s PIN number still from the P9 form. 

• Fill in taxable salary from the total figure you get under COLUMN H of your P9 form. 

• Fill in Taxable pay on taxable salary from the total figure you get in COLUMN J of the P9 form.

• Fill in amount of tax deducted (PAYE) from the total figure you get on COLUMN L of the P9 form. 

Remember to include details for all employers in additional rows if you had more than one employer in 2015.

Skip the next two sheets i.e. Skip “Advance tax credits” and “IT payments credits” and go to the last sheet titled “Tax computation”.

NB: You only need to fill “Advance tax credits” if you have a commercial vehicle and you only need to fill “IT payments credits” if you paid tax in advance, which most people don’t do. 

STEP 8

Still use your P9 form. 

Open the last sheet titled “Tax computation”. 

You only need to fill two spaces: “defined/pension contribution” and “personal relief”. 

• For defined/pension contribution, fill in the figure you find under COLUMN e2 on your P9 form. 

• For personal relief, for most people it is 13, 944 (which is 1162 multiplied by 12 months), so fill in 13, 944.

• If you worked for less than 12 months in 2015, take the figure you find under “personal relief” COLUMN K on the P9 form and multiply it by the number of months you worked i.e 1162 multiplied by the number of months worked, then fill in the answer you get under “personal relief” on the Excel sheet.

Once you are done filling in the two fields, scroll down and click “validate”.

If there are errors, you will get an alert. At the bottom of the Excel sheet on your extreme left, click on the red tab with the title “errors”. It will show you the errors, click on each and give the correct information, then when you are done fixing all the errors, go back to the last sheet titled “tax computation” and click “validate” again. You will get a message asking you if you want to generate a document. Click “yes”. The document (ZIP file) generates automatically and is saved on your computer under My Documents.

 

STEP 9

To finish, go back to the iTax website and log in again https://itax.kra.go.ke/, click “returns” >> file return >> fill the required info. The required info is: Type of return, return period 01/01/2015 to 31/12/2015, and then click on browse >> My Documents >> select the ZIP file you see ending in _ITR. Click open to upload onto the iTax system. Agree to the terms and conditions, then scroll down and click “submit”

 

STEP 10

Check your email for a notification from KRA, it is sent almost immediately. If the figure in the attached acknowledgment receipt is negative, KRA owes you (they'll pay you when they feel like, like after five years. They'll deposit the cash directly into your bank account, which you already filled in their form). If the figure is positive, you owe KRA. Pay them without delay.

Congratulations! You are done! Let’s do this again next year.

Remember you can file your returns for 2016 as early as January 2017, you don't have to wait till June (the last minute!)

NB: IF YOU REALISE YOU MADE A MISTAKE AFTER YOU HAVE ALREADY FILED YOUR RETURNS, YOU CAN AMEND/MAKE CHANGES/EDIT  >>>:

If after you finish filing your returns, you realise you made a mistake, worry not, you can change it, but do so before the 30^th June deadline. 

To amend your return, repeat the same process, log in to iTax >> click on “returns” >> then “file amended return”.

 Select the tax obligation “Income tax – Resident individual”. 

On the next page that opens, select return period “from 01/01/2015 to 31/01/2015”.

On “type of form to download” select “Excel” then click on download. You will be asked if you want to download the form for amendment, say OK. The Excel file you had filled in will download. Double click on it to open it. 

Click on “enable content” on the yellow line you see at the top. Then click on “amendment” at the bottom left of the page. You’ll get the Excel sheets with all the information you had already filled in; all you need to do is to change whatever you are changing, then go to the last sheet titled “Tax Computation” and click “validate”.

If there are errors, fix them and click “validate” again. Once you validate, you will be asked if you want to download a document (just like in STEP 8), say yes/OK and the document will automatically save in your computer on My Documents. 

Go back to the open amendment page on iTax and click on browse >> My Documents >> and select the new ZIP file (check on the time stamp on the right of the ZIP file to make sure it is the latest i.e. the amended form). Click “open” to upload, then click “submit”. You’re done amending.

 And that's it! You're done amending.