and young, big and small businesses, by employers and employees.
The government is also feeling it. We are all broke. Renowned investment guru Robert Kiyosaki says ‘We all have defining moments. It is in these moments that we find our true characteristics. We become heroes or cowards, truth tellers or liars. We go forward or we go backward.’ We are in such a time, we are in that moment, and the big question is, who do you run to?
We can only run to two persons; God, and ourselves. You must be wondering how divine intervention comes into play in a financial crisis; or whether it even makes sense. I have always admired the wisdom of the scripture teachings. Well, most ignore them, explaining how we got here in the first place.
We have ears, but we don’t listen; we have eyes, and yet we don’t see. There are three components of your income that are very important. How you allocate money into them defines your financial health. These are; Consumption, Savings and Investments.
For most, all income goes into Consumption – eating all that you earn. While this may be your preferred option, it is not wise. A lot of excuses are given for this behaviour: my kids have to eat, I am paying for school fees, it’s for rent, we don’t get paid much, and the classical, 'the money is not enough!'
The money you get will never be enough to cover all that you seek. It has never been, and it will never be. So, a change of mind and attitude could be a good starting point. It is worthy to note that, it is not how much you get, but rather how much you keep that determines your state of financial affairs. You could be earning KShs100, 1,000, 100,000 or even 1 Million, but if you ‘eat’ all of it, you have no one to blame for your bad situation.
Living within your means is a concept that has been preached for long, and I’m sure you have heard it, but chose to ignore it.
The Saving component is very important. A percentage of your income – let us say 10 percent of whatever amount you earn – should be put aside, for a rainy day. Preferably in savings bank account, or even an MPesa or Zap account. This is the money that you use when you get an emergency, when you get into a crisis, or when you have no income. It gives some sense of security and much needed confidence in knowing that we are covered when things are bad; like they are at the moment.
The most important and constantly ignored is the Investment component. This is the only part that seeks to increase your sources of income; making the pie or the cake bigger. Increasing the sources of income should be a priority. This will ensure that you have options. In case one doesn’t work you will have another one working.
We run a very high risk when we rely on one source of income. What happens when it stops? What happens when you get sacked, or retrenched? When your maize is not bought?
When your tea or coffee is affected by forces beyond your control? When your only business is down, when the fish market is poor, and your only cows get sick or die?
The answers to these question calls for us to broaden our thinking and cultivate a willingness to change our ways. To go back to the basics.
Let us take this financial crisis as a chance to make things better; to create new avenues of making money, to get away from reliance on a single income stream and come up with new ideas of doing things so we can free ourselves again. We can do it, you can do it. Like Emerson once said, ‘What lies behind us and what lies before us are tiny matters compared to what lies within us.’
Like the parable of the sower, not everything that you do might bear fruit ‘but the one sown on the good ground….’ That is the one that ‘….bears fruit and yields, some 100, some 60, some 30 times what was sown.’
This article originally appeared in SmartBiz Africa. The writer is a financial advisor with Suntra Investment Bank. This e-mail address is being protected from spambots. You need JavaScript enabled to view it
