Money Management
November 11, 2024
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One of the basic human needs is shelter. But where you live is not only a basic human need but also an expression of who you are and most importantly your social class. Neighbourhoods are segmented according to how much people are worth, especially in urban areas.
When someone says they live in Karen, you can presuppose how much they make. If they talk about Roysambu, you can speculate too. And if they mention Mathare you can place them in the social class hierarchy.
It is not strange therefore to find that people aspire to live in better neighbourhoods, characterised by security, better amenities, and community. Because of this aspiration, one might be tempted to live in a neighbourhood whose lifestyle is beyond their means.
What then are the signs that you might be living in the wrong neighbourhood?
Since shelter is an essential human need, housing is a priority expenditure when having a personal budget. However, with the need to live in better neighbourhoods, this expenditure can be exaggerated. Straining your budget to food an exaggerated housing expense brings with it added expenses. But before we address the added expenses, what is the reasonable amount to append on rent?
At Money254 we have written about various ways to budget. One of the ways would be to use the 50/30/20 rule. With this formula 50% of your income goes to your needs, 30% to your wants, and 20% to your savings.
Housing is a need but not the only need. Hence, housing should not take the entire 50%. Ideally it should at maximum take 30% and the the remaining 20% is used on other needs.
This means that if you are making Ksh100,000 then your rent should not exceed Ksh30,000. Meaning if you want to live in Karen where rent is Ksh150,000 then you should be making at least, Ksh500,000.
Therefore a clear telltale sign that you are living in the wrong neighbourhood is how much of your salary goes into paying your rent. If it approaches or exceeds half, you are living beyond your means.
Read Also: 10 Warning Signs You Are Living Beyond Your Means
Living in a specific neighbourhood does not only mean having a house where you come in and out. It also exposes you to the surrounding area, facilities, and communities.
Essentially you want to live in a neighbourhood where the things that surround you and facilitate your life there are not foreign to you. For instance, if you are making above Ksh100,000 there are conveniences that you expect, hence living in the slum might be a hindrance to accessing such conveniences.
However, while making the same amount there are conveniences of people living in Muthaiga who make much more that you cannot afford. Therefore, you need to live in a neighbourhood commensurate with what you make and what you expect.
Some of the conveniences that might influence where you live would be access to shopping malls, gyms, healthcare facilities, schools, and other entertainment and recreation facilities.
If you find yourself in a neighbourhood where you cannot pay the gym subscription of the gym closest to you, you cannot spend a night out with friends in the local entertainment joint, your children cannot school in the neighbouring schools, or even, you cannot do your shopping in the shopping mall next to you, then you might be overshooting in terms of the neighbourhood you are residing in.
Discrepancy in lifestyle is closely tied to limited access to essential services.
A good way to tell if you are living in the wrong neighbourhood is by looking at the lifestyle of the people living around you.
For instance, if you are living in an upper-class neighbourhood people in the neighbourhood are most likely using private means to commute or use taxi services. However, if you are still using matatus predominantly, then that neighbourhood might be in the wrong neighbourhood for you.
Other lifestyle indicators can be if your children attend public school while your neighbours' kids attend international schools, depending on government medical coverage while all your neighbours have comprehensive medical coverage, and having to fundraise for needs that your neighbours easily settle by themselves.
Keeping up with the lifestyle of your neighbours when you cannot afford it is not only a strain on your budget but can also fuel an unhealthy borrowing habit.
On the other hand, living in a neighbourhood where your lifestyle is significantly higher than that of your neighbours can expose you to insecurity. Or you might have to spend a lot more to secure your property.
Read Also: 15 Ways to Stop Living Paycheck to Paycheck
Debt is a personal matter. However, the rule of thumb when it comes to debt is that consumer debt is not advisable. Good debt is debt that is used to invest or buy an asset that will generate even more income.
Therefore, if you find yourself borrowing to keep up with the lifestyle in your neighbourhood, that should be a wake-up call that you are living in the wrong neighbourhood.
Read Also: How to Avoid the Trap of Consumer Debt
Income Disparity
If you have a great income disparity between what you earn and what the average earner is in a given neighborhood may be a pointer that you are living in the wrong neighborhood.
As previously intimated, there is an average income for people living in a given neighbourhood. People living in highland areas such as Muthaiga, Runda, Riverside, and Karen make upwards of half a million shillings a month. Those living in Kilimani, Ridgeways, Westlands, Lavington, and the like make upwards of Ksh150,000 while those living in lower middle class like Ruaka, Kikuyu, Imara Daima, Dagoretti, and Donholm make upwards of Ksh50,000.
Living in areas where there is a huge disparity between what you make and what the average person makes in the area either on the upper side or lower side, is not ideal. It can be a signal that you might be living in the wrong neighbourhood.
Security is a significant aspect of the pricing of a neighbourhood. The more secure the neighbourhood the more expensive it tends to be. Therefore, crime is a good indicator of what neighbourhood is right for you.
If one resides in the slums, there is a high crime rate in such a neighbourhood compared to areas such as Riverside and Westlands.
If you live in an area where there is a high crime rate and you have a high chance of being subjected to a crime then that might be the wrong neighbourhood for you. For instance, if you are using a phone worth Ksh100,000 and you reside in the slums, you become a target, because of that phone. This then shows that if your lifestyle allows you to buy a phone worth Ksh100,00 then maybe that is not the neighbourhood you should be residing in.
The neighbourhood that you reside in is not only the house that you own or are renting, it is the people you are living with, the amenities that are around you, and the activities undertaken in that area.
If you are assessing whether you are living in the wrong neighbourhood, it is important that take a wholesome view. But most importantly, ensure that you are living within your means and are not accumulating debt just to live a given lifestyle.
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