I always wonder why we shy away from talking about money. Yet, money is such an important topic not to pay attention to it. Its important to frankly talk about money because the decisions we make about money today will affect the quality of our lives tomorrow. Unfortunately, majority of us are trapped in the comfort zone. The comfort zone of 'hustling' just a bit to make ends meet. As long as we have a job and a salary (however, meagre), we are cool - we can survive. Our ambitions are limited by our comfort zones because we are afraid of the unknown or we simply don't want to put in the time. While others are taking risks around us and making it in life, attaining financial freedom and independence - we are busy cheering them on. All the while hoping that one day a miracle will happen and release us from financial bondage. Well, wonder no more, here are a few financial tips to help you attain financial freedom: Spend Less Than You Earn. Never spend all the money that you earn. Keep your total living expenses and outgoing payments at no more than 80% of your take home pay. This gives you a cushion that you can use to implement a plan for future needs and even a few luxuries. If you are close to 80% or over already, review your finances to find areas that you can cut back, or look at ways to increase your income. Warren Buffet says: if you buy things you don't need, soon you will sell things you need. Pay Yourself First. This means setting money aside for yourself to ensure that your future is secure. For instance, if you know you have challenges in handling money, one way to accomplish this is to arrange for your employer or bank to deduct a portion of your salary or income before you receive it. The deduction can then be deposited in a fixed account, investment group, Sacco or a project you plan to start or are already working on. You should aim for at least 10% and go higher if possible. In other words, don't save what is left after spending, but spend what is left after saving. Needs First, Wants Later. Make a monthly budget for your needs only. This budget should include the basics such as food, rent, transport, and healthcare. You should consider entertainment and recreation, but give them a lower priority. This will help you separate mandatory expenses, you know the MUST HAVE's and the GOOD to HAVEs, from discretionary income. It also allows you to figure out how much of your income is being directed towards things you want and luxuries. A good plan for optional things (wants) is to plan how to get them without decreasing the amount that you save or taking the money from everyday living expenses. Delaying the purchase of non-essential items also gives you time to decide if your money could be better spent in another way. Set Smart Financial Goals. Set goals for managing your finances. Create a roadmap for your future, so you will know where you are going and how long it will take to get there. Your financial goals should be specific and measurable. Do not just say you will cut expenses. Decide how much you can decrease one or two expense items. Your goals should be achievable and realistic. If you want to buy a home, you need a plan for setting aside extra money to come up with the down payment. That might include doing odd jobs or seasonal work to reach your goal. Your goals should be timely. Set a date for them to happen. Even if you miss a milestone, here and there, you can get back on track by reviewing and revising your personal financial goals and strategies regularly. The Bottomline: Personal financial freedom and wealth creation doesn't happen by chance. Its takes an acquisition of knowledge to know what to do. No one was born with the ultimate monopoly on financial knowledge. Remember your biggest enemy to financial independence is not government's taxes, your boss or the devil, its ignorance - lack of knowledge. Decide today to start the journey towards financial freedom by acquiring knowledge. My people perish for lack of knowledge, the Good Book says. I hope you consider joining LEMP 360° Course where you will be equipped, not only to attain financial freedom, but discover how to create wealth. We look forward to having you in the program. Image Credit: budgetily.com
The funny thing about life, and moreso about money is that we all want to be rich and wealthy. We want to be successful, prosperous and live a good life. The irony however is that majority of us don't take time to study and understand the principles of financial freedom and wealth creation. Our concept and understanding of savings and investments is based on speculation, trials and errors, copy and paste, and what I call 'get rich quick big ideas hype' such as 'quail eggs' investment, pyramid schemes etc. Its important to understand that wealth is not created in confusion and disorder. It doesn't happen by magic, hype or speculation. It takes discipline, commitment, consistency, focus, and more importantly, knowledge and understanding to create wealth and be financially free. Unfortunately, for most of us our ignorance has subjected us to years of poverty and being broke. Its almost certain, acceptable and normal for us to be broke every January. Well, allow me to share with you 12 things on how to be poor in 2016. 1.You hope salary will make you rich. Don't exclusively rely on your salary to become rich, unless it reads like the bank statement of a corrupt African president. Look for ways of having an additional income besides your salary if you want to create wealth. Utilise your gifts and talents, opportunities and networks around you to make an extra coin. Don't be a slave to a monthly salary. It can only take you so far. 2.You busy building others’ dreams. Remember if you don't build your own dream, someone else will hire you to build theirs. What are you doing everyday to build your dream? Outside your 'normal 8am-5pm' work schedule, how else do you utilise your time in building your dream? Are you busy building other people's dreams and forgetting to build yours? 3.You dream instead of doing. The only difference between successful and unsuccessful people, is that unsuccessful people are busy dreaming while successful people are busy doing. Many of us have super great ideas that would make us rich and successful in life. Unfortunately, the most we do is talk about it, and do nothing. We are afraid to take risks. We have become experts in procrastination. 4.You spend more than you earn. Oh boy! I learnt this through the school of hard knocks, you want to be poor, sweetheart, spend more than you earn. Live beyond your limits. Ensure your expenditure is always more than your income, and you will be guaranteed a life of poverty, lack and daily struggles. 5.Humble beginnings ain’t for you. We all want to live in fancy houses. Drive nice cars. Be wealthy, successful and rich. But then again, how many of us are ready to start small? So, what do we do, we borrow to buy the car or things we can hardly afford, then end up in financial bondage because our pride and ego couldn't allow us to be subjected to days of humble beginnings. No house is built from the top, honey. 6.Don’t start saving until you get big money. One of the biggest lessons I have learned about money over the years is the fact that there's nothing as small money. No matter its unit, each coin has a value. Don't despise small change. Develop the habit of saving the little you have, and little by little you will be building your empire. 7.Biashara’s and hustling is for Kikuyu’s. I can't tell you how long I have heard that. Business and hustling is for certain tribes. So, what do the rest of us do, we hang around in dingy bars, with our loan-financed jalopies parked outside as we blame the government and "that other tribe" for stealing our money and taxes. In the meantime, the chap who is cleaning our Japan-imported juggernauts outside, will end up being our landlord in a few years. 8.Compete for flossets. Assets are things that bring you income, flossets are things that take your income. We are more inclined to flossing and showing off the newest phones, newest cars, trendy design clothes. For us, we think we have arrived. We are with the it. We have arrived. We compete with celebrities in our dressings and lifestyle. Only problem is, our financial 'flossing' is build on quick sand, for we are busy impressing and pleasing our friends by investing on liabilities, instead of assets. 9.You complain and blame others. Walk on the streets of Nairobi and ask anyone randomly why they aren't rich or successful and you will be hit by a long list of people they blame. They will blame the government, their teachers, their boss, their parents, landlord, spouse, pastor, siblings etc. Newsflash buddy: its your life. You are the C.E.O of your life. You are responsible for your own life. Whatever happens in your life, you have either allowed it, tolerated it or ignored it. If complaining and blaming others will lead to richness, trust me most of us would be trillionaires. 10.You live for today. Its called the You Only Live Once (YOLO) mentality. So, what do we do, we blow up the little coins we have in our pockets without a care for tomorrow. And that's why there are so many people right now depressed because they have rent to pay, school fees, car insurance etc... The irony, you should have seen them rocking like rockstars in December, and literally making it rain. 11.You look for shortcuts. We live in the country of deals. Tenderpreneurship is the order of the day. We all want to get rich, quickly. As a result, we are busy stealing from each other, killing each other and abusing each other. We live in a man-eat-man society. People 'conveniently' falling in love to be assured of a better life. Politicians stealing the little taxes collected. Preachers inventing ways of collecting 'seeds'. That's why we bribe our ways into almost anything, including getting married. 12.You just don’t get it. Finally, after all has been said and done - we just don't get it. We don't get it that the essence and meaning of life should be tagged on a higher calling, involving a personal relationship with Our Manufacturer, God. We don't get it that success in life shouldn't be measured by materialistic things. For one day, we will all die. We will be lying on that cold slab. Breathless, lifeless. Finally, silent. We won't be buried by the things we loved or worked so hard to possess. The most we will be buried with, if we are lucky is a fancy coffin. Perhaps a designer suit or dress. And it will be a wrap for us. That would be it. Dead. Gone. Forgotten. And life will go on like we were never around. We just don't get it that it profits no man to gain the whole world but loose his own soul in eternal life. We don't get it that there's more to life than a fancy car, house, lifestyle and all the wealth and richness in the world. We don't get it that the essence of life is living a life of purpose. A life which God, the Creator of all things, intended us to live. Finally, we just don't get it that when we die, which we all would, nothing else will matter, except how we treated fellow human beings, and more importantly how we related with the Big Guy Upstairs. Unfortunately, by the time we finally get it. It will be too late. We would be breathing our last.
Douglas Waudo shares his mistakes, experiences, lessons learned and achievements on personal financial freedom after going through the Centonomy 101™ – Personal Financial Management Course in October 2013. He delivered the talk during the Centonomy Open Day held at the Nairobi National Museum on January 18, 2014. https://www.youtube.com/watch?v=ZbKE4ytU8OA