WHY BECOME FINANCIALLY LITERATE

My most inspirational experience must have been meeting a woman who has become a real estate mogul. She started creating wealth with Kes 5,000 and a fruits and vegetable stall. She now earns approximately Kes 500,000 in monthly rental income. This was done without post primary school education and with two children to feed. A lot of people have approached me recently and asked me how they can save in this environment of high interest rates and high inflation.How can they survive now that their loan repayments are going up? It doesn’t matter whether interest rates are high or low. Universal Principles always apply. The first one is spend less than you earn. The second one is own more (assets/ investments) than you owe (liabilities).

I run a retirement planning class and it always interesting to hear what this means to different people. For me, retirement does not mean, not working. It means that I can choose to work or not work; my assets will grow, stay ahead of inflation, and generate an income that sustains my lifestyle. Robert Kiyosaki in his book Rich Dad Poor Dad, likens this Financial Freedom to planting a tree. You water it for years then one day it doesn’t need you anymore but can provide shade for your enjoyment. This is what your assets do and you can only acquire them by spending less than you earn.

We don’t necessarily need more money to get through our life. We need to be more financially literate than we were before. Renew the thinking that led to the challenges we might be facing as a result of recent and sudden economic changes. I would also encourage that instead of wasting time wishing that this was not happening, focus on your action plan. Economies go through ups and downs but if we never invest in the time to educate ourselves, we will maintain the same habits, the same complaints, the same situations through all the ups and downs. During the up cycles we will feel rich, and therefore consume more. During the down cycles, we will have less money available to us, complain about costs and believe the only answer is in a higher salary. None of these strategies lead to Financial Freedom.

The difference with the financially educated person is that they do not play victim, understand that the principles above still apply, make the necessary adjustments and know how to allocate money to which assets to take advantage of the environment in order to make a bigger leap when the next cycle comes along. I can’t fit this entire lesson on a 500 word column but ask yourself, even as we go through what I can only describe as different times, will you take the opportunity to learn more or just survive?
Waceke Nduati –Omanga| waceke@centonomy.com| www.centonomy.com