For the Kenyan diaspora, sustainable financial planning means capping remittances at 20-25% of after-tax income, building your own emergency fund first, and using low-cost transfer services like Wise — and PesaMarket's comparison tool helps you find the cheapest way to send money home.
Managing money while supporting your family back home and building a life in your new country is hard. Here is how you can do it sustainably.
Financial Challenges for People Who Have Emigrated
Two Financial Lives
In essence, you are running two financial households:
- Your life in your current country.
- Supporting your family in Kenya.
Common Challenges
- Pressure to send more money than you can afford.
- Guilt about spending your own money.
- Emergency requests that disrupt your plans.
- No retirement savings.
- How to accumulate debt.
Building a Sustainable Budget
Step 1: Know Your Numbers
Income (monthly):
- Salary/employment
- Extra income
- Other sources
- Total income
Fixed Expenses:
- Rent/housing
- Utilities (water, electricity, gas)
- Insurance
- Transport
- Debt payments
- Total fixed expenses
Variable Expenses:
- Food
- Personal spending
- Entertainment
- Total variable expenses
Money Available for Remittances:
- Total income - Fixed expenses - Variable expenses - Savings = Money available
Step 2: Set a Reasonable Remittance Budget
Basic rule: Do not spend more than 20-25% of your after-tax income on remittances.
Example:
- After-tax income: $4,000 per month
- Reasonable remittance: $800 - $1,000 per month
If you currently send more:
- Reduce gradually
- Communicate with your family
- Help them find other options
Step 3: First Build an Emergency Fund
Before increasing remittances:
- 3-6 months of expenses in savings
- Keep it separate from remittance money
- Keep it in an accessible account
Why this matters:
- You cannot help your family if you yourself are in a difficult situation.
- Emergency requests will not derail you.
- It greatly reduces stress.
Setting Boundaries
Why Boundaries Matter
- Your own stability ensures long-term support.
- Giving without limits leads to burnout.
- The family benefits more from regular, sustainable support.
How to Set Boundaries
Decide:
- A fixed monthly amount - The amount you give regularly.
- An emergency reserve - Set aside separately for genuine emergencies.
- A definition of an emergency - Hospital illness vs. wants.
Communicating About Boundaries
Example conversation:
"I have looked at my finances and I can give $X per month sustainably. In addition, I have set aside $Y for emergencies. This way, I can support you reliably over the long term."
Handling Requests That Exceed the Budget
- "I understand that this is important. I will see what I can do next month."
- "That is not within the criteria of my emergency reserve, but let us talk about how to plan for it."
- "I am not able to give more right now. Here are some alternatives..."
Improving the Efficiency of Your Money Transfer Approach
Reducing Transfer Costs
| If you send | Using Western Union | Using Wise | Annual Savings |
| $500 per month | $300+ in fees per year | $60 per year | $240 |
| $1,000 per month | $600+ in fees per year | $120 per year | $480 |
Schedule Transfers Wisely
- Send every month on payday (automatically)
- Combine small amounts to make one larger transfer
- Do not spend large amounts on matters that are not emergencies
Help the Family Reduce Dependency
Long-term sustainability includes:
- Supporting income-generating activities
- Investing in education that brings independence
- Reducing gradually as the family becomes more self-sufficient.
Building Your Wealth
Don't Skip Retirement Savings
Problem: Many people in the diaspora skip retirement savings in order to send money.
Result: Poverty in old age, and needing help from others.
Solution:
- Contribute the amount your employer matches (get free money).
- Even $100 per month makes a big difference.
- Increase your contribution gradually.
Investing While Sending Money
The 50/30/20 method:
- 50% Needs (including appropriate remittances)
- 30% Wants
- 20% Savings/Investment
For people in the diaspora, adjust to:
- 50% Needs + essential remittances
- 25% Wants (reduce if necessary)
- 15% Savings
- 10% Extra remittances/Investment in Kenya
Investment Options in Kenya
Consider investing a portion of the money you send:
- Land and buildings in Kenya.
- Company shares (NSE) in Kenya.
- Kenyan government securities.
- Business and family investments.
Benefits:
- It grows family assets.
- It can generate income.
- It provides long-term security.
Insurance and Protection
For You
- Health insurance (mandatory in many countries)
- Life insurance (if you have dependents)
- Disability insurance (protects income)
For Your Family in Kenya
Consider:
- NHIF for health services
- Education insurance for children
- Life insurance, if appropriate
Cost: Often affordable, provides security.
Responding to Emergency Requests
Creating an Emergency Reserve Account (Kenya)
Goal: To hold enough support funds for 2-3 months.
Purposes:
- Genuine emergencies
- Medical expenses
- Unexpected needs
Rules:
- Used only for genuine emergencies.
- Any amount used must be replaced.
- Not known for everyday use.
Assessing a Request
Questions to ask:
- Is this urgent or can it wait?
- Is this a one-time matter or a recurring one?
- Are there local resources available?
- What will happen if I don't help?
Building the Family's Resilience
Help the family build:
- Small savings (even 1,000 KES per month)
- Income diversification
- Putting emergency plans in place.
Tax Optimization
In Your Country
- Generally, money sent is not tax-deductible.
- But it may count towards tax credits (depending on the country).
- Make sure you keep records.
Kenyan Considerations
- Money sent is not taxed on recipients.
- Investment income may be taxed.
- Property ownership has tax implications.
Long-Term Planning
Questions for the Next 10 Years
- Will I return to Kenya?
- What is my retirement plan?
- Will the family become self-reliant?
- Where will my assets be?
Scenario Planning
If I return:
- Invest in projects in Kenya
- Maintain relationships
- Plan the process of returning
If I stay abroad:
- Balance investments across all locations
- Plan care for my elderly parents from a distance
- Consider buying property in both locations
Generational Planning
The current generation:
- Supporting current needs
- Building family assets
- Investing in education
The next generation:
- Removing dependency
- Creating opportunities
- Building local wealth
Avoidable Mistakes
1. Sending All Your Money
This leads to:
- No personal savings
- Mental and physical burnout
- Inability to help in critical situations
2. Having No Boundaries
This leads to:
- Escalating requests
- A family that does not plan
- Resentment
3. Forgetting to Save for Old Age
This leads to:
- Poverty in old age
- Dependence on others
- Being unable to help anyone
4. Transferring Money at High Cost
This leads to:
- Money lost to fees
- Less money reaching the family
- Unnecessary costs
Sample Budget: $5,000 Monthly Income
```
Income: $5,000
Fixed Expenses:
Rent $1,500
Utilities (water, power, etc.) $200
Insurance $300
Car payment $350
Debt payments $200
Total fixed expenses $2,550
Variable Expenses:
Food $500
Transport $150
Personal spending $200
Entertainment $150
Total variable expenses $1,000
Savings:
Retirement fund (15%) $750
Emergency savings $200
Money Transfers:
Regular support $400
Emergency reserve (Kenya) $100
Total Expenses: $5,000
```
Conclusion
Sustainable financial planning for people living abroad:
- Know your numbers - Budget carefully.
- Set boundaries - Talk honestly about what you can manage.
- Build your own security - First, set money aside for emergencies.
- Optimize money transfers - Use low-cost services.
- Don't forget about retirement - Future planning matters.
- Plan for the long term - Help your family become financially independent.
You can support your family AND build your own life. This requires balance, boundaries, and smart planning.
Reduce your money transfer costs by using our comparison tool.