The debate on MPs salaries has been ongoing for quite a while now. Of course most of us are completely dismayed that the first order of business by the leaders we queued to vote in, is to attempt to increase their personal incomes. At first I was angry when this debate started but that anger turned into sympathy as I realised that the root of the problem at the end of the day is financial illiteracy. As I continue to read various media reports and listen to statements issued to support the rationale behind pushing for an increase in pay, it also struck me that their thinking is not different from the way a lot of us think about money. Their attitude to money is unfortunately very reflective of the society. Here are some key things to consider so you either start getting yourself out of this situation or you don’t find yourself in the same shoes down the road as our MPs.
More money will not solve your problems. The MPs want their salaries hiked because they believe more money is the answer. The have termed the gazetted salary of half a million shillings as “inadequate to sustain their lifestyles” according to media reports. The problem here is the “lifestyle” bit. If the current salary is inadequate so will any increase be. If it is inadequate it signals currently the MPs are spending their entire salary or even more. Given that we saw reports of some of them asking for salary advances before they were sworn in, I think we can reasonably assume that we may have a case of people living beyond their means. If today your expenses are equal to or greater than your income, you have a problem. If you do get the chance to earn more money you will still spend all of it or more than it. You will carry the same destructive habits into a bigger pay slip and when you get into the same jam you will continue to think the answer is a bigger salary. This cycle will never stop and leaders with this mentality will continue pushing the boundaries on what they should be earning. The reason to earn more becomes not what you have delivered in terms of results but because of inflation and increase in lifestyle expenses. I have often said if you cannot manage Kes 1,000 you cannot manage Kes 1 mn. Our MPs first need to manage and live within the current salary just like we must within our own incomes. We all (MPs included) need to get out of this lifestyle prison i.e. working for a lifestyle. Since lifestyle can always be increased – there is always something new to buy or a more expensive place to eat lunch – it is a dead end and will result in poverty. Let us all make cuts today where we need to and focus our future ability to create income; not on consumption but on wealth creation. Delayed gratification is an important principle for all of us to embrace. What we have been seeing recently with our leaders is the unmanaged desire to have it all today rather than work progressively towards it.
Image is not Wealth. The MPs have also been pushing for increased allowances to buy luxury vehicles. Not just functional vehicles but luxury vehicles. Can you see the irony here? People who cannot sustain a lifestyle on a gross income of over half a million shillings should not be contemplating the purchase of luxury vehicles. Not withstanding that the country cannot afford it, they also cannot afford the expenses that would come with these vehicle. Many of us make this same vital mistake of spending huge amounts of money for an image that we cannot afford to maintain and one that is depleting our ability to invest. This Kes 7 million car will not even be worth half of that in 5 years. It may fool people that you are wealthy but just because you drive a big car doesn’t mean you are. There is a lot of poverty being driven around in luxury cars. Those who have created wealth are those who have been able to harness the ability to multiply resources including money. When you have Kes 7 mn and choose to spend it on a depreciating item such as a car, you are not multiplying it but depleting it. You may look wealthy to the financially illiterate but you will never be wealthy. If you have access to some money please think of how to grow it and generate income from it instead of spending it on lifestyle.
I believe the MPs may be also trying to live up to their titles. They probably believe there is a certain way an MP should look. You may also get a promotion at work or a big title. Don’t succumb to the image pressure associated with your title and spend on liabilities. Let your work at the end of the day speak for you not just your job description. You cannot buy the respect that comes with actual performance with a luxury car. It may fool the “fools” for a short term but it is not sustainable.
Waceke runs a program on personal financial management. Find her at waceke@centonomy.com|
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