How Budgets Build Factories

How Budgets Build Factories

We have been told time and time again to stick to a budget. For many people even the word budget already has a negative connotation. When we are told stick to a budget many of us already feel restricted by the phrase, we start resenting the process and hence never manage to have much success with it.  In my article last week, one of the questions I asked people to evaluate is whether they spent more than they earn.  A lot of people have written to me admitting this is one of the areas that they had failed.  However at the same time budgeting is something we must get right if we want to make a difference in our financial lives. Many of us have tried to work with a budget time and time again. Maybe at the beginning of every year, you have done a budget.  Maybe you intend to do yet another one this coming year as you set your resolutions.  What will be the difference this time round?  To get this right, we need to make the process of budgeting our friend rather than our foe. We need to change how we think about budgeting and maybe rethink our motivation for budgeting.


Why budget?  The answer we hear time and time again is so that we can manage or control our expenses.  Looks like a good enough reason in theory but somehow it may not have had the effect in your life that you want it to have.  Look at is this way. Who do you really pay with your money?  When I am teaching, I like putting it this way – Whose factory are you truly building?  Most people will get their salary and then pay all of it to other people. They will pay the supermarket, utility companies, restaurants, bars, banks (via debt repayments), fuel companies, mechanics, salons, clothes shops etc.  Where your salary or income goes is exactly who you are paying.  Are you anywhere in that equation? Are you building your own factory as well or just other people’s factories? So from now on instead of looking at a budget as something that will restrict your spending, look at it as something that will help you build your factory. Say you owned a business and had employees.  You would pay salaries and bills at the end of the month.  Look at your spending like you would those bills.  You would handle your expenses in a way that there would be some profit for you to take home as the business owner.  A budget will enable you to take home that profit. It is about allocating money for the various expenses in a way that will leave something for you to build your factory with. Just like a business would not be sustainable in the longer term if it were continuously making losses, you will not create wealth if you are making similar losses in your personal budget. i.e. spending more than you earn.


Given that the ultimate aim of keeping a budget is to help you build your factory, some of that money must end up in savings and investments. We are getting into a new year. Many will start off well and then down the lane what happens?  Expenses increase. Most of us use this as the excuse to give up on keeping a budget hence building the factory.  Say fuel prices increase and that affects your monthly spend by five thousand shillings. The default action for most people would then be to save five thousand shillings less.  Wrong move!  You don’t take money away from your factory to build someone else’s.  When fuel goes up your electricity provider will try and pass on that increase to you. Take from other people’s factories when expenses increase because most of the places you are spending money on will pass on costs to you before they take dip in profits. If fuel goes up do not cut down your savings.  You can cut something else.  Cut your entertainment to fuel your car.  You can shop more efficiently e.g. buying wholesale.  You can be careful with electricity consumption at home.  The message here is cut from someone else’s factory and not your own. You will only know which factory you can cut from if you have been keeping a budget and keeping track of your spending. Apart from keeping that money aside to literally build your factory, which is in the form of financial investments, the budget helps you allocate funds in a way that works for you.  Some expenses may have value to you and some may not. I learned a long time a go that my lunch money is a holiday.  Three hundred shillings a day on lunch ends up being Kshs 108, 000 a year.  Yes they are both other people’s factories but on my deathbed I will remember and cherish the experiences I had while I was on holiday. Where I spent money on daily lunch will not have that much impact.

Putting this into practice is simply the money leaves your account before you distribute to other people’s factories. When all is said and done it is what you put in your factory that you keep a close eye on.  Working with a budget helps you control other expenses to ensure your factory is built up.  Think about it this way as you plan for the New Year ahead and see if it will make a difference.

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  • Great article

  • maina Azimio

    Good advice Waceke
    My own observation is that most of us lack willpower to put in the effort required to change for the better
    It’s human weakness to fall for the easy and predictable than to break the limitations of habits.
    This is why we keep on making budgets & resolutions that we do not keep.

    We need a workable formula to translate these desires to pursuit. And in pursuit we require patience, persistence and perseverance. Only then can we legitimately win this battle

  • Very true Waceke..and i concur with Mr. Azimio above. Watching centonomy on you tube & esp Mr Azimios story inspired me to join the class. I would never have understood what the analogy of other peoples factories was untill my 1st class last week. Aged 34years and having been in employment in different corporates both in Kenya & overseas for the last 13 net worth is ZERO. I have built other peoples factories my whole working life. BUT NOT ANYMORE..1 class & i now know better. I look forward to the next class. Thank you Waceke & team.

  • Martin Mwanja

    Very inspiring article, I have been building other pples factory, but this has been my eye opener. Am startng with a budget just to built my own factory thanx n thanx again for the article

  • Joan

    this is truly an inspiration big up waceke..Thank God for digital migration i would never have watched this

  • william

    great article… ready to built my factory. joining centonomy at the age of 24 was my best personal decision i made.

  • Moses Lutome

    Very helpful.

  • Anne

    Made me think.