Miser, pinchpenny and stingy: Part 1

Guest post by Samuel G. Njenga

He is one of the strangest human beings I know; surely he must be. This guy is my first cousin so I know his background and his path to his current status. He is much older than me, in his late 40’s. Some of us hail from very large families (nuclear), after all ten kids was no joke even then, but this dude has 6 brothers and 5 sisters. Theirs was a life where even basic needs were hard to come by. He finished primary school, did two years of high school then dropped out for lack of fees.

He got his first job as a farmhand to take care of a rich man’s pigs. Rich men who owned cars in the village were few and far between. I vividly remember him atop a Toyota Stout, whose front design looked like a pig. Together with the son of the rich man who used to drive the Stout, they’d pick left over foods from some big hotels in Nairobi and deliver them for the pigs to feast on. He took care of the pigs for some time till he was promoted to deliver saw dust to homes; you know the saw dust that has always been used as bedding for chicken. The rich in the village deal with strange products and services, things that the elite in Nairobi will never think of.

This cousin of mine worked his socks off for several years and was saving a lot. He eventually quit his job as a farmhand and bought an old taxi. Back then the shilling had a bit of value, it costed him 17k. Those loud-mouths in the village were even taunting him that he purchased the taxi with a bag full of coins. U know those funny taxis in the village which have seen better years; the ones when inside you feel like you are outside, very dusty and if it rains you are rained on. The starter is a set of wires, the driver has to carry water because the thing can chemka anytime. Those vehicles (if we can call them so) are just strange, what with a Mercedes side mirror, Peugeot carburetor, stools for seats and the body of a Colt…and the mabatis on the body if they ever cut you, you’d get tetanus.

As a taxi operator he started displaying strange tendencies, like eating an orange for lunch, mandazis and chai for supper, walking around in faded shirts all in the name of saving. For this man, extracting a shilling off him was tantamount to milking a bull. He was as stingy as they come. Maybe because life had previously been harsh on him.. You may have heard about that hardware guy somewhere in Kabete (his name with-held) who once collapsed and when taken to hospital, the doctor advised him to eat. I could see from far that my cousin was headed there.

Someday I met the fellow as I was heading home from high school on my mid-term. Knowing that he was doing well as a taxi operator, I requested him to buy me a cup of tea. He jokingly said (or so I thought) that we will go take tea and I will pay for it; after all the kidogo pocket money l had in my pockets would be enough for two cups of tea. We went to the café and enjoyed the cup of tea, but when the bill was brought, he insisted that I had to pay. You see I thought he was just joking but I was in for a rude shock and I ended up paying for it….

This fellow never ceases to amaze me. He however continued with his saving habit till he managed to buy an old Nissan to ferry horticultural products for small scale farmers to City Market. When I pass by the City Market it reminds me of so many things. I went to a high school that taught Aviation and my dad thought that I’d finally live my dream as a pilot. When I landed there, I opted to study Agriculture to the shock of my dad after I realized that everyone was fighting to study Aviation; I like swimming against the current. Immediately after high school and for lack of something else to do, I used to farm in a small scale those horticultural products on the river bed and on maturity I’d take them to City Market. So I was a customer to this cousin of mine for some time till I went to Campus. And by the way, I almost declined to go to Campus as I was really doing well with my farming. Actually were it not for my dad who actually thought I was nuts, I’d be a big rich farmer by now. I may never know whether it was a wrong or correct decision.

In the next post, I will tell you more about this strange cousin of mine; someday he told me that a jalopy I was driving was his dream car, and as of the car he drives now I’ll leave it to your imaginations.

100 million Cheque: Final Part

Continued from part 2

The Merc was no more and off it went with the flashy life. Mark thus got a bit of cash from the proceeds of the sale. He knew that the small cash available to him would make or break him; it could tip the scale between absolute poverty and recovery. Remember the story of that widow of Zarephath and Elijah and that handful of flour in a jar and a little olive oil in a jug? After much thinking, it took Mark a week or so to decide what to do with the cash. It finally dawned on him that his recovery was pegged in reviving the fortunes of his ailing firm. He thus decided to revamp the firm by investing in advertising and popularizing his services.

He went knocking on doors of companies seeking to sell his services; after all this is a skill he had acquired while selling insurance to strangers. Of course it was never easy but the guy is kinda convincing; the type that would remove a snake from its hiding (kutoa nyoka pangoni). In a few months his marketing drives started to pay off and clients starting coming. His fortunes started to change for the better. He had a clear plan on his business and set targets. On a good week, he’d make as much as half a million after expenses because he started getting high profile clients (managers and business owners).

Mark went to the back to the basics of financial prudence. He embraced the basic but simple concepts of financial management. You know most people fail to understand that the road to financial freedom is one that requires very basic knowledge. Isn't it easy to understand that you must spend less than you earn?? Anyway, he managed to dramatically improve his finances by embracing frugality.

The other big change he had in his life was to become a staunch Christian. He quit drinking and left the bad company. Actually most of his friends had already left him. He slowly got better friends and soon after walked down the aisle. Sometimes we underestimate the strength of friends and the motivation one can derive from a supportive spouse.

With better fortunes he managed to buy 2 plots at Garden estate. He built his family’s abode in one of them. The other plot he did the guest houses which were almost completed from what I saw. I noted how positive the man had become. He was constantly pausing to remind us of how God has blessed him. He could radiate the feel good factor to the two of us and I could from his tone that this was a man who had deep lying passion that can only be seen in people destined for greatness.

Then out of blues I asked him whether he finally paid himself the 100M. He looked up and told us that indeed he has never had cash in the bank anywhere close to 100M. However, the valuation of the guest houses alone together with the land was around 120M. So in his own words his wealth more than showed that he had earned the 100 Million.

Paul jokingly asked him why he was driving a Toyota Wish being that wealthy. The man rose from his seat and his response was telling, “My friends, I have driven the big ones and I can assure you that it is no big deal. In fact sometimes back I met one of my former drinking buddies who asked me what I was wishing for now that am driving a Toyota wish. Someday I’ll drive the big ones again but I need to ensure that systems are in place that generates enough to sustain the big ones”.

I realized the transformation the man had gone through and it was amazing. It took him as many as 9 years to hit the target but at least he did. I noticed how he had a grip of his life and how he had rediscovered his dream and kept it alive despite falling. Often we fall but we forget to rise up, dust ourselves and proceed with our journey with lessons to boot.

We finally left Mark’s place at 9.00 pm and it is then I remembered how tired I was but the absorbing story more than refreshed me. I left knowing that there was need to stretch my imaginations and pay myself big….a few hundred millions would do for starters…QED, isn't it?

Next post we'll talk about misers, I know one and his story is out of this world.

100 million Cheque: Part 2

Continued from part 1

After writing the 100M cheque and saying the big prayer, Mark got thinking. He always had the urge to get into consultancy of some sort and he thought it was a good opportunity to try something. After thorough thinking, he decided he’d venture into training managers and business owner from all walks of life on matters corporate governance. He however didn't have a clue how and where to start. As he was thinking up of setting a firm, he decided to apply for scholarships abroad with a view of acquiring some skills in his line of interest.

Two months after sending many applications, he got a positive response from some University in Australia. Lucky for him, the scholarship was fully paid for. He therefore, held his thoughts and plans of setting up the firm and decided to go study first. He found himself in Australia and studied for 3 years. Upon graduation he was lucky to get some job there, a contract for two years. He really worked his socks off and saved a lot of money. At the expiry of the contract he returned to Kenya as a loaded man with approx. 15M. A tidy sum for a young man in his mid-thirties. This, coupled with newly acquired skills on corporate governance and training, he was raring to go.

On landing in Kenya, his immediate thoughts were to actualize his dream and set up his firm and get going. Blame the devil if you may but the rich fool mentality caught up with him. He assumed that the money was too much for him to finish in his lifetime. He bought a big car and started to indulge in alcohol together with some friends. Talk of bad company. To make it worse he was still single and girls started milling around him. He thought that overnight he had become ‘tall dark and handsome’ now that the girls were looking for him. You know some of us who are as short as Zacchaeus of the bible and not so good looking get worried when all of a sudden girls get interested in you. Of course when you sit on a fat wallet you can become very tall and good looking.

No money is big money if all you are doing is spending it. Mark lost his dream and money too. One day one time, he realized that his money was tending towards zero at an alarming rate. But then it was too late when he realized so, because by the then it was only the big car remaining and some tens of thousands. He also realized that he forgot God; you see when all is bliss, it is very easy to forget your Maker especially in the days of your youth (Ecclesiastes 12:1). Someday, as frustrations started getting in, he took his bible and as he was flipping through he saw the 100M cheque. It made him more frustrated and in the heat of the moment he tore the cheque into two and threw it in the dustbin.

That night he tried to sleep but somehow he could not. In the dark of the night, he had an opportunity to look at roller coaster of a life he had lived, mistakes made, opportunities missed and lesson to be learnt. He knew that he had goofed big time. It was on this night that in my humble opinion he experienced a transformation. He rose from his bed, went looking for the torn cheque in the dustbin, took it and returned it inside his bible. This explained why the cheque I saw was in two pieces. It was a time of re-awakening his dream, at time when he asked God for a second chance on bended knees. Prodigal son returning to his father and promising to behave and become a good steward.

By then his drinking buddies had left his life, and the gold prospectors too had realized that no more gold was available. This time, the lessons were finally and painfully learnt. He was evidently at the rock bottom of a sinusoidal wave. You know they taught me about y = sin x to be the sinusoidal wave.

Mark embarked on immediate transformation by first offloading the state of the art Mercedes Benz. It had to go……after all where else would he get any reasonable cash to rebuild his life?

The final part details how he managed to rebuild his life to his present state which left me in awe. He not only became a strong Christian believer but he also adopted a business bible, same to the one adopted by Fai Amarios (he of kata pingu fame), RIP. He also walked down the aisle and he kept saying his family is a big inspiration. Curious to know whether he finally earned the right to cash the 100M cheque?

100 million Cheque: Part 1

 Guest post by Samuel G. Njenga

On that Saturday I was extremely tired after a drive to and from Nakuru together with my good friend and business partner Paul. When we were somewhere along the Northern By-pass, Paul suggested that we pass by his friend’s place somewhere at Ridgeways. I was really tired and all I wanted was to go home and have a rest. Somehow Paul convinced me otherwise because he really wanted to see some guest houses his friend was doing.

When we entered his compound, Mark was on hand to receive us. A very talkative fellow who could not stop smiling. He took us round the magnificent 10 bedroom maisonette which occupied approximately 50% of his ½ acre land. The property boasts of two large living rooms, with double ceiling and feature staircase, two large modern design kitchens, with exquisite finish of granite and wood. There are ten en-suite bedrooms with external balconies whose bathrooms are fitted with hot water Jacuzzi bath tubs and separate shower cubicles. There is also an office study, prayer/gym room, TV room, and SQ with 4 rooms. I also noticed wooden pergolas over all balconies. A stunning property with exquisite gypsum ceilings throughout. A site to behold.

Externally, there is approximately 1/4 acre of mature garden with immaculate landscape and design the main entrance has bridge with water feature and fountains for a memorable welcome. There is also a stunning swimming pool with hot Jacuzzi, gazebo, changing and shower rooms. I also saw 4 covered car parks and additional open car park areas that could fit 8 or so cars.

The property had been converted into a guest house and Mark was very jovial narrating how the idea struck him. In fact, what was bothering his head was how to market his services. Inside the house, one of the rooms had been converted into his office. We finally sat inside his office and he started telling us of his immediate plans on how to market the guest house. While he was talking nonstop, I noted a bible on top of the table and my curiosity got the better of me. I took it and started flipping through. Somewhere stuck within the pages of the bible, I saw a cheque leaf, torn into two pieces but looking very very old. My eyes couldn't help but notice something weird about the cheque other than how tattered it was. It was a cheque drawn by Mark and to himself (drawer and payee were the same), done in 2007 and with a figure of One Hundred Million. Well, my head got thinking….and I finally gathered the courage to ask him what the cheque was all about.

He subconsciously rose from his seat and with a lot of excitement he started pacing around the office. It is like my question took him down memory lane and he remembered something. What followed was a story that has stuck in my head for some time because it was not only amazing but I realized that Mark had gone through one roller coaster ride in his life.

The dude was once working for an insurance firm based in Nairobi, rose through the ranks and became a manager in 2006. As a manager he had a company vehicle, attended big meetings on behalf of the firm and everyone out there thought he was doing very well. The unfortunate thing is that despite his big position, his pay was a paltry 60k. He got so frustrated because in his own words; his was a dog’s life; barking at the behest of the master and living from hand to mouth. He realized he was not heading anywhere in his life.

One day, he decided to call it quits. He wrote a resignation letter, dropped it at their HR office and left in a huff. When he reached home, he thought of his next steps but all was dark ahead of him. It is then that he pulled out his cheque book and wrote himself a cheque of 100 million. He put it inside his bible and went down on his knees in prayers.

“Lord God, I have written this cheque in total trust and belief. I am at the lowest point in my life but I know you can lift me up to the glory of your name. Amen”

In his own words, he was to work extremely hard and pay himself 100 million in 5 years’ time and as to where the money was to come from, he had no clue. The story got juicier and I lost track of time as I listened to him…………..more onthis in the next post.

The ‘Mama Uji’ who saved to buy a house

Article by FRANCIS AYIEKO Source: Daily Nation, Posted Thursday, November 22  2012 at  20:00

http://tinyurl.com/c4uy4xa

Beaming with pride, the woman appeared to be in dreamland as she showed visitors her new two-bedroom house.

Although the house lacks the trappings of up-market apartments such as a bathtub, sauna, in-built wardrobes, stylish floors and wall finishing, elegantly done granite-surface kitchen or top gas cookers, it was decent enough to be any renter’s envy.

Until last week, the middle-aged woman lived in a shanty in Kawangware estate, where she had stayed with her late husband (she said he died recently because of stress) since the 2007/2008 post-election violence that uprooted them from their former home.

She has been selling porridge to make ends meet. For the past four years, she has been saving part of the proceeds from her business through a chama affiliated to the NationalCooperative Housing Union (Nachu).

Her savings helped her to get a loan from Nachu that was enough to construct the Sh1.2 million house she now owns in Kiambu County, just a few kilometres from Nairobi’s central business district.

Dozens of other women in her chama also benefited from the loan and are now proud owners of houses like hers under the same project.

This woman could not hide her joy last week as she showed journalists and guests who had come for the official handing over of the houses by Nachu to the owners.

The common thread among the beneficiaries of the new houses was that they were all small-scale traders.

Lesson one: Owning a house starts with saving diligently.

Lesson two: No amount of income is too small to lead to home ownership. What is important is the will and determination to work towards realising your dream house.

Of course many may argue that it is almost impossible to save for a house in Kenya because of rapidly rising prices.

True, housing prices are rising rapidly, but if you want it bad enough, you will save and look for creative ways to achieve your dream. The case of the Mama Uji mentioned above is proof enough.

The thing is, you do not necessarily have to go through the formal mortgage market to own a home.

In fact, in its latest survey report, The Mortgage Company (TMC) says that the formal mortgage market is facing stiff competition from the alternative market, thanks to the high-interest-rates regime that dogged the country’s financial sector for almost one year until three months ago.

The mortgage brokerage firm said that more and more Kenyans are turning to saccos and microfinance institutions to finance housing development.

“The profound shift in mortgage rates of last year has led to the acceleration in the development of the alternative mortgage market, expanding the funds coming into mortgage finance and the options available to Kenyans,” said TMC managing director Caroline Kariuki.

Notable, she said, was the way the diaspora is becoming organised setting up saccos, a trend that could see them become significant players in the mortgage and property sectors.

“This kind of engagement additionally opens up a good vetting avenue to provide the lenders with credible partners. Altogether, this is a trend worth watching closely,” said Ms Kariuki.

I have heard HousingFinance managing director Frank Ireri say that competition is becoming stiff in the country’s mortgage market because of the entrance of commercial banks, saccos, and insurance firms, forcing stand-alone mortgage firms to “be creative” to stay afloat.

The truth of the matter is that borrowing for the full value of a complete house, as required under mortgage, does not suit most aspiring home owners. I do not think it is an exaggeration to say that over 90 per cent of Kenyan home owners did not take the mortgage route.

The most common route is staged development or what is popularly referred to as incremental approach to building, where beneficiaries stage out the development of the house and borrow for those stages based on their capacity.

With this approach, nobody is left out of home ownership bandwagon.

Do you desire to own a house…what are you doing about it? Our next post, 100 million cheque?

Overnight success is just a fallacy, ask any millionaire

Article by Murori Kiunga, Source: Business Daily Posted  Monday, April 16  2012 at  17:35 http://tinyurl.com/bf5mozc

Robert Kiyosaki, an authoritative figure in entrepreneurship says: “Most people are waiting for the perfect time to start a business; they are waiting for all stars to line up and all lights to go green.

Unfortunately, that perfect time will never come. To be an entrepreneur, you must start with what you have on the ground and pick up the rest along the way.”

You do not have to accumulate a lot of capital to start a business in a big way. You don’t have to wait until you have educated all your children, built your own house or paid all your debts before you can venture into that risky venture laced with good prospects.

You can start something that will earn you money right now from where you are. You can start it right in your house while you are working or studying. All you need to do is to be creative and focus on what you have rather than what you don’t have.

One of the greatest enemies of success in business is fear. Often people tell me that they would like to start a business but they fear to fail. I always tell them boldly what I believe; that entrepreneurs don’t fail. It is enterprises that fail.

The first thing you should do from the moment you start the entrepreneurial journey is to disengage yourself from the business in a way. Do not be too emotionally attached to business.

Let your business have its own life. This means that in the event the business collapses, you do not collapse with it.

Don’t venture into business with expectations of becoming fabulously wealthy like some entrepreneurs you know or hear about.

Entrepreneurship is journey; a marathon, not a sprint.

In 2008 a Nigerian entrepreneur Alhaji Aliko Dangote was ranked by Forbes as the richest man in Africa, the position he holds to date.

In 2011 his net worth was estimates at $13.8 billion.

He is also simultaneously the richest person of African descent in the world, surpassing Mohammed Al Amoudi ($12.3 billion) and Oprah Winfrey ($2.7 billion.)

Born in Kano, his grandfather, the late Alhaji Sanusi Dantata provided him with a small capital to start his own business.

He started business in Kano in 1977 trading in commodities and building materials.

He later moved to Lagos and continued trading in cement and commodities. Encouraged by tremendous success and increase in business activities, he incorporated two companies in 1981.

These and others that followed now make up the conglomerate known as Dangote Group.

By any standard this man is qualified to give you advice on entrepreneurship and wealth creation.

These are the words from his own mouth, “I built a conglomerate and emerged the richest black in the world in 2008 but it didn't happen overnight. It took me thirty years to get to where I am today. Youths of today aspire to be like me but they want to achieve it overnight. It’s not going to work. To build a successful business, you must start small and dream big. In the journey of entrepreneurship, tenacity of purpose is supreme.”

Your desire and inspiration should be something higher than money. Oprah Winfrey said, “You know you are on the road to success if you would do your job and not get paid for it.” In other words your motivation in business should be giving your customers with solutions to their problems. Your rewards, not wages will be money.

Mr Kiunga is the author of The 7 Pillars of Financial Success and The Art of Entrepreneurship: Strategies to Succeed in a Competitive Market.

In our next post, Swahili proverb: Haba na haba,hujaza kibaba, practically speaking.

The Pros and Cons of Stocks Vs Real Estate

Guest post by Young

There are several investment vehicles promising fantastic returns and I believe you’ve heard of and, may be, you’ve participated in a few. Every investment vehicle has its own pros and cons. This is why astute investors have strategically diversified investment portfolios that make them richer and generally protect their investment. To help your understanding of real estate investment, we’ll compare it with investment in stocks.

Real estate investment is a dynamic investment that leaves greater control in the hand of the investor compared with stocks. A stock is a nominal representation of the value of your investment in a company. The more the company does well in its line of business the better the value assigned to its shares and the more money that could be made by the investor when such shares are sold or when dividends are paid. Except you have a considerable number of shares in the company, you practically do not have a say in the day-to-day running of the company or the several decisions of the board that could make or mar the company.

However, in real estate, your investment is tangible and your control is greater. You decide what to buy, where and when as well as when to sell. Your investment is relatively secure as you can buy or hold or sell without recourse to any board. Also, the level of knowledge and expertise required to control both investments varies. Without an in-depth knowledge of accounting, human resource and management, an illiterate real estate investor can still make good money.

One of the key concerns of most investors is the level of risk involved in a particular investment and the security of funds. One of the major attractions of real estate is the fact that although it does not always rise in value, it is very stable when compared to stocks. Stocks are subject to high level of volatility. In the United States, in the late 1990’s technology stocks boomed and by early 2000’s when they crashed, many stocks lost over 80 per cent of their value and some became worthless. Some stocks are practically worthless as at today. This is something that is a rarity in real estate. Real estate has the capacity to outpace inflation and it is very resilient.

Of course, real estate has its own down side when compared with stocks. The major difference is in liquidity. Liquidity is the ease and cost with which you can sell an asset and get your money out of the investment. It is much easier to sell your stocks and convert them into money. All you need do is to contact your stockbroker and within two or three days, your stocks can be converted to cash. Although there is always a demand for real estate, the time and energy required to navigate the process leading to a sale ensure that you cannot easily convert it to cash. This illiquidity is also a strength in another sense. It means that you are more likely to hold a piece of real estate longer than a stock. Whilst those trading in stocks often lose focus of the long term perspective.

Furthermore, when we compare overall returns and wealth producing capability of real estate with stocks, we begin to understand why several asset portfolios are heavily tilted in favour of real estate. For instance, the owner of a block of four-bedroom flats in an average location in Lagos or Abuja in Nigeria, may earn at least N2m annually from rents whilst also enjoying the appreciation in the value of his property. Often, when the economic environment is harsh there is a lull in the construction market as more people cannot afford to build. The consequent pressure on the rental market gives the property owners the opportunity to review rents upwards and generate more funds from their investment. Generally, maintenance costs are far below the accrued rental income.

Finally, for tax purposes, owning a piece of real estate is similar to owning a business. You have access to deductible expenses (including depreciation). Depreciation is an allowable tax deduction for buildings .If you keep a good record of your expenses when purchasing or operating a property, with guidance from your accountant, you can claim some deductions. So, back to our question: stocks or real estate? You choose.

I choose a combination of the two almost on 50/50 basis. For the future I will be tilting more towards real estate.

What about you, what is in your portfolio?

In our next post, becoming a millionaire is not a wishing thing, unless in a dream or magic fairy-tales.

Involve your spouse in financial decision making

Guest post by Young

Getting your spouse involved in the management of family finances may be tough for some individuals, but this has its own benefits.

Marriage counsellors say it is important to carry your spouse along when making financial decisions in a family. In our article last week on ‘Involving family members in saving money,’ it was stated that your ability to save is vital, but involving your family in the process is more beneficial. According to experts, financial security in a family doesn't come easy, but requires adequate planning and strict adherence to saving. This, however, can only be meticulously achieved when you involve your spouse in the management of your family finances.

Experts say in most situations, there is an individual in the family who likes doing all that pertains to numbers and payments. This fellow pays the bills, manages the spending or cash flow, looks for great deals and works on spreadsheets, leaving his or her spouse out of the activities. But experts note that even though this individual is doing all of these things, there is still another money manager in the family. “No one person can do all the money arithmetic in a home, you have to involve your spouse and you will be surprised at his or her input,” says a marriage counsellor, Mrs. Anozie Love.

She notes that your spouse might not be as involved in the day to day management of your family’s finances, and explains that this is because in many cases your spouse doesn't have knowledge of how much money is in the family’s bank account. Experts note that most times, the spouse just knows how much he or she can spend on entertainment or clothes for the month and maybe a few other budget categories at his or her disposal.

According to experts, this is a dangerous approach to family finances. “No one knows what might happen to the Chief Finance Officer of the family and if something costly happens to him or her, what will the spouse do?” Anozie asks. She further asks how would the spouse step in and manage everything if something drastic happens to the CFO? Experts therefore say it is important for both spouses to manage their resources as this has great benefits. Below are simple steps on how you can involve your spouse in financial decision making, according to experts:

Budget together monthly

This is a very important in a home, experts say. They note that spouses should budget their money together each month as this will boost their savings and will trim unnecessary expenses when shrewdly done. Even though you have fixed spending in place, there are still planning decisions to be made each month for discretionary spending, marriage counsellors say. One thing you must understand is that your spouse doesn't have to be necessarily involved in the day to day finances at the level of detail as you may have, but should have knowledge of the resources and how they’re being used. When this is done, he or she will appreciate it if undertaken for mutually gainful reasons.

Review expenses together occasionally

According to experts, it is also important you review expenses incurred by the family occasionally. This could be on a weekly or biweekly basis. Professionals say while the monthly meeting is important, so is a weekly meeting about money. They note that all that this requires is a review of spending for the major budget categories and a discussion around new significant expenses needed for the month. It could be seen as a status meeting for both spouses. You may not know how much you are saving for your family by doing this until your spouse is not around. If you want to take it to the next step, you can write down the balances of the major budget categories for your spouse so he or she knows the overall state of the spending plan. “This also has a way of unifying the family, especially the couples,” Anozie adds.

Switch bill-paying duties

Let your spouse pay some of the bills. If your spouse usually is not the one who pays the bill, allow him or her give it a try for some time, but be willing to offer help if necessary. Experts say this will give your spouse a better understanding and appreciation of how important it is to be involved in the decision making process of your family’s finances. Allow your spouse to pay some of the monthly bills, but don’t overload the person who doesn't normally do this work for the family. You may give him or her a few key bills to manage, as this is a great way to involve the person and for your spouse to feel fulfilled being a good financial steward that contributes to the family.

Solve the maths together

This should not be left to one person. Engage your spouse in the maths. Allow him or her to try and calculate how the family would thrive on a limited sum for a week or month. If your spouse still can’t see the importance of his or her participation in the financial decision making, sit down together and look at your budget or create a budget if there is none. When the numbers are right there in front of your eyes, it’s easier to be involved in the family finances. He or she will be forced to make inputs, provided you are both in good terms at the time of working on the family budget.

The Good Book Says

Can two walk together, except they be agreed? (Amos 3:3, KJV). Two are better than one, because they have a good return for their work: (Ecclesiastes 4:9, NIV). Think about these wise words.

In the next post, we shall look at ‘the pros and cons of stocks versus real estate’.

Healthy investment decisions

Guest post by Young

Although it is practically impossible for one to be 100 per cent infallible in predicting a good or bad investment, it is possible to narrow down the playing field by following basic principles while investing. Experts note that this will help ensure beginning or advanced investors a margin of error when investing their funds for a good return earning. It is therefore important for an investor to adopt the basic principles of making good investment decisions if he wishes to trim his risks and make considerable progress in his venture.

Business professionals say whether it is cheap insurance, good insurance or just plain savings bonds, in today’s unstable economy one cannot ever be 100 per cent certain in investing. They, however, note that choosing wisely will definitely be an asset in achieving success or avoiding financial disaster and cutting the risks. Below are simple tips to making excellent investment decisions in an unstable economy.

Take enough time to think

At the moment, third world economy is unstable and harsh to businesses. Businessmen, in separate interviews with this correspondent, often complain of the unfriendly economic policies which they have to contend with in order survive. As a result, they note that whoever wishes to invest in the third world must take enough time to think through what venture he plans to dabble into. According to experts, whenever one has made the decision to invest a certain amount of money, the first thing that needs to be established is that it will take time to devise the following principles and a subsequent financial strategy.

Investing in one’s future is definitely not something to just plunge into without careful thought and consideration. Experts say the lightning-fast nature of the Internet is conducive and geared towards convincing surfers to make quick and impetuous decisions. Consequently, this fact needs to be on one’s mind continuously before making any investment decision as any error might be regretted. Of course, no one loves to regret in business.

How much risk can you take?

You should know how much risk you are willing to tolerate in whatever business you do. Knowing the difference between an average savings/money market account and investment vehicles which form part of a portfolio is vitally important when making successful investment decisions, experts say. So as an investor, are you ready to take risks? Calculated risks should be taken in business to succeed. Every form of investment has its associated risks, and any investor should be ready to undertake such risks, but shrewdly.

Never give up easily

Do not succumb to pressure in business. You must understand that every business has its own pressure and it is not wise to give up easily after encountering some challenges.

Generally, families, friends and the shoe-shine boy on the street will all offer financial advice. Most of it will not be qualified, expert advice. Most of them will know of a cheap insurance policy, promising stock or a well-performing company that has good future potential. Whatever they may advise or try to push, in order to avoid bad investments, it is crucial for a person to not succumb to outside pressure. Put in your best and be wise.

Undertake detailed research before investing

Experts advise that in today’s highly volatile, economic environment, it is primordial to carefully research a particular financial vehicle which carries out one’s financial goals the most. Meticulously checking out the specific investment offers, competitive offers from other sources and how well the investment is performing is a crucial prerequisite. You should ensure detailed research before investing in any form of venture.

Also important is to painstakingly research the reputation, integrity, and track record of the financial institution offering the investment. Experts say this is just as important as the investment itself. Some of the basic tips for this include taking time to implement a savings and/or an investment plan with a diversified portfolio; determining how much risk one is willing to assume: research which investments are insured, non-secured and/or low-risk; and never bow down to friendly advice if it does not adhere to your short, medium or long-range goals.

Are you adventurous?

Many of our entrepreneurs want to sit in a place and expect things to work out fine. Experts notes that you must have a dream and that dream must influence your entrepreneurial vision. “The moment you have that dream, you should understand that it doesn't come easy, you must drive it. What do I mean by driving it? It is not going to be easy. So how do you as an entrepreneur identify your priority? Even in the face of making it, when the returns begin to come in, how do you determine your priority? Do not forget where you are coming from? What informs your taste? You have to be adventurous. When people talk of lack of funds, I laugh. You see, when you talk of lack of funds, I see it as the least of all your problems. The idea that you want to develop as an entrepreneur is key and paramount.”

You need to diagnose the efficacy, relevance, workability and feasibility of your idea. These are the issues that many entrepreneurs tend to push aside and they begin to talk about the issue of funds. “People talk about issues of policies and infrastructure, but these are only essential and secondary, they are not primary,” As an entrepreneur, you must have the drive and understand your dream and idea.

The key question is, “Why are you in this business? Can you explain or is it because your brother, sister, or uncle is doing it? No! If you go into business because of that you have messed up everything and your problem starts from there. So when you have gotten your idea right, you can now talk of money or funding.”

In the next post, let us talk about involving your spouse in financial decision making. 

Financial choices in your 20's: Final Part

Advantages of Investing in Your 20’s

Young adults often face financial challenges due to burdensome student loans, relatively low-paying junior-level positions and a lack of budgeting experience. While those in their 20’s know they are supposed to be saving for retirement, the golden years seem unimportant and a long way off compared to the consumer purchases that could be made now. For many young adults, it seems easier to put off any investing decisions until their financial situation becomes, at least theoretically, more stable. Young adults in their 20’s, however, are actually in a prime position to enter the investing world, even with college debt and low salaries or wages.

Time

While money may be tight, young adults have a time advantage. There is a reason that compounding - the ability to grow an investment by reinvesting the earnings - was referred to by Albert Einstein as "the eighth wonder of the world." The magic of compounding allows investors to generate wealth over time, and requires only two things: the reinvestment of earnings and time. The longer money is put to work, the more wealth it can generate in the future. As your savings grow  you increase capital to enable you diversify your investments from liquid to more fixed assets, e.g. buying a piece of land to develop in future of sell with capital gains.

Take on More Risk

An investor's age influences the amount of risk he or she can withstand. Young people, with years of earning ahead of them, can afford to take on more risk in their investment activities. While individuals reaching retirement years may gravitate towards low-risk or risk-free investments, such as bonds, T-Bills and Money Market Funds, Fixed Deposit Accounts, young adults can build more aggressive portfolios that are subject to more volatility, and that stand to produce larger gains.

Learn by Doing

Young investors have the flexibility and time to study investing and to learn from both successes and failures. Since investing has a fairly lengthy learning curve, young adults are at an advantage because they have years to study the markets, and to refine their investing strategies. As with the increased risk that can be absorbed by younger investors, so too can they overcome investing mistakes, because they have the time needed to recover.

Tech Savvy

The younger generation is a tech savvy one, able to study, research and apply online investing tools and techniques. Online trading platforms provide countless opportunities for both fundamental and technical analysis, as do chat rooms and financial and educational web sites. Technology, including online opportunities, social media and apps, can all contribute to a young investor's knowledge base, experience, confidence and, ultimately, expertise.

Human Capital

Human capital, from an individual's perspective, can be thought of as the present value of all future wages. Since the ability to earn wages is fundamental to investing and saving for retirement, investing in oneself - by earning a degree, receiving on-the-job training or learning advanced skills - is a valuable investment that can have strong returns. Young adults often have many opportunities to increase their ability to earn higher future wages, and taking advantage of these opportunities can be considered one of the many forms of investing.

The Bottom Line

Saving for retirement is not the only reason to make well-planned investments. Many investments, such as those made in dividend stocks, can provide an income stream throughout the life of the investment. Young adults in their 20’s have certain advantages over those who wait to begin investing, including time, the ability to weather increased risk and opportunities to increase future wages.

In the next post, we shall explore making healthy investment decisions.

Financial choices in your 20's: Part 2

Invest or have fun first? That is the question

Continued from part 1

Many youth in their 20’s land their first decent paying job out of college and will do one or all of four things i.e. buy a car, move out of home and/or travel (includes shopping spree) and have fun!

I personally wouldn’t mind doing all the above.

However, saving and investing at a young age has always been one of my dreams. Most young people will not understand the golden opportunities from investing unless they talk to people who have experience in investing and have good knowledge about it.

For example if one invests in a piece of property in during their 20's just imagine how much the value of that property would have increased by the time he or she is in their 30’s! 

A writer at Kenyan Daily post wrote an article of 10 great rules that will help someone remain poor. They include;

1.     Never Wake up early.

2.     Never plan to spend your money.

3.     Don’t think of saving until you have very large amount of money.

4.     Don’t engage in activities usually reserved for the uneducated.

5.     Don’t think of starting your own business until an angel comes from heaven and gives you capital.

6.  Complain about everything except your own attitude: Blame the system, the government and the bank that refuses to lend you money. They are all bad and don’t want you to get rich.

7.    Spend more money than you earn. To achieve this, buy consumer products in credit and keep borrowing from friends and employer.

8.    Compete in dressing; Make sure you wear the latest clothes among all the workers in your office. Whenever your neighbour buys a new phone, get one that is more expensive.

9.     Get yourself a nice second- hand car that costs more than three times your gross monthly pay.

10.   Give your children everything they ask for since you are such a loving parent: They should not struggle for anything because you do not want them to suffer. That way, they will grow up lazy and hence poor enough to ensure they cannot help you in your old age.

Young people are full of energy, potential and excellent ideas. Let us not waste time and start saving and investing now. However, as a young investor, don’t rush to start investing without a plan. It is a good idea to have a mentor who will guide you on this.  Always have a goal, what you want to achieve, then put down a strategy and specific activities to help you achieve it. Definitely challenges will be there but when you have the desire to invest for a brighter future, you will make it.

Orison Swett Marden states that “there is no investment you can make which will pay you as well as the effort to scatter sunshine and good cheer through your establishment”.

We wind up this great post by highlighting five advantages of investing in your 20’s.

Financial choices in your 20's: Part 1

Guest post by Young

For most people in their twenties, the idea of saving and investing seems like a lifetime away. Most people don’t start thinking about saving or investing for future until they are well into their 30's. It is important to realise that the choices you make in your 20's play a critical role in your future financial security. Here are some tips that will help you to build a solid foundation for your future.

Focus on your career

In your 20's, getting established in your career and earning a regular income should top the list of your priorities. This is the time to invest in yourself, to acquire and develop those skills that will enhance your career and boost your earnings. You might have good ideas about becoming an entrepreneur and getting rich, but the discipline of earning regular income from a job and sticking to it for a time, will go a long way in preparing you for lasting financial security.

Acquire financial education

Take deliberate steps to improve your understanding of money matters. There is a plethora of information in the media, books, magazines, newspapers, seminars and the internet that will help guide you as you make decisions.

The first step in financial planning is to identify your goals. Your short-term goals (under five years) might include a wedding, buying a car or taking a vacation. Your medium term goals (five to 10 years) may be to build a house or get a mortgage, whilst your long term goals may be to plan for your retirement and children education.

Live within your means

It is very tempting when you first start earning, and particularly where you have few financial responsibilities, for you to spend excessively on clothes, accessories, new gadgets, mobile phone bills. All these can be a serious drain on your finances at this stage if not carefully considered. Look over your income and monthly expenses. Create a budget so that you can see exactly where your money is going and make adjustments where necessary.

Be cautious about borrowing

It is better to borrow for things that have lasting value such as a home or an education rather than for consumables such as gadgets and clothes. Give yourself a deadline by which time you would have paid off or at least reduced the most expensive debt, usually credit card or store card debt. Pay your bills on time so that you can build a solid credit history from now. This will be important when you need to borrow more significantly in the future.

Pay yourself first

Once your debt is under control, automate your saving. Even if money is tight, try to have atleast 10 percent of your monthly income (all that you receive, be it salary, wage or gifts) transferred to savings or to a mutual fund account through a direct debit. Start small; you will be surprised how quickly this builds up. If you are more aggressive, you can push the savings up to 40% and live on 60%, especially when you are young and single.

In your 20's, you have the luxury of time. Even where you make mistakes, there is time to recover as your investment earnings grow over several years; this means that if you are consistent and disciplined, your savings will be able to grow significantly. Remember too, that this is the time to travel, pick up new skills, and have new experiences before you have larger responsibilities to take care of. Time is on your side; so enjoy it.

Start investing to meet your goals

Historically, the stock market has out-performed other types of investments over the long term, but it comes with some risks. If you don’t own any stock, the market continues to present an opportunity to purchase attractive stocks at decent prices. If you don’t have the time or expertise to select stocks and you have only a small sum of money to invest each month, a stock market mutual fund may be the ideal investment to meet your medium and long-term goals. Better still; put your money in real estate. Buy pieces of land within 20 km of cities or near upcoming towns (County HQRs) and speculate. In Kenya, nothing is paying better than this, and in fact real estate has made young millionaires than any other sector within the last decade. It is only difficult when you have not started, or at least, don't know what you want. But before investing in real estate, due diligence is necessary. 

Seek guidance and wise counsel of a trustworthy person who is already investing in the field you want, be it stocks, money market or real estate. However that does not underscore the importance of your own research and seeking knowledge in the field.

It may seem odd to talk about retirement when you have barely got started with work; naturally you are more concerned about your job and not the end of your working life which is decades away. As soon as you start work, you will be eligible to contribute to a Retirement Savings Account (“RSA”) through your Pension Fund Administrator (“PFA”) You have an edge if you start to invest regularly for retirement from now, and you have a better chance of building a significant nest egg with relatively little effort.

Accommodation is often a challenge. Even if you are fortunate enough to have a free roof over your head provided by your parents or other family members and friends, you can contribute to family expenses on items like utility bills. You can also set aside some of the money that you would have had to use for rent to build up equity towards getting a mortgage so that you can own your own home.

Earn your independence

It is the desire of every parent to ease the path for their children and most children will embrace this gladly. Whilst it’s nice to get a lot of help from your parents, don’t let it get in the way of your attaining financial success. Earn your independence and start to take charge of your financial life. Your parents provided you with an education; now you are no longer a child; your finances are your responsibility.

The habit of managing money is more important than the amount. It is not how much you earn that matters, it is how much you keep. The key to building a solid foundation for future financial security is to have a budget, save, invest regularly, and control your debt. The choices you make now, will largely determine how your life will be in the future.

We shall pick up from here in our next post. Please share a link of this blog to any young adult you know. FE might just be the answer they are looking for to shape their financial future.