PERSONAL FINANCE: How close to poverty are you?

You are probably one step away from a financial disaster. Yes, I’m talking to you reading this. You’re probably a few shillings away from poverty. If your employer fails to remit your salary next month, what will happen to you? What if there is a major illness in the family that drains your finances? What will one month in hospital do to you? What will happen if you lose your job? What if your business falls apart? What if your spouse dies or you get separated? Or if one of you loses your income? What if all your debts are recalled? Do you understand how it is possible to be one step away from poverty? If you don’t take charge of the situation, poverty will definitely follow.

There is no deal, sponsor, tender, inheritance, or Sportpesa jackpot waiting to save you. If you are old enough to get yourself out of bed in the morning you are more than able to take responsibility for your financial life.

Susan recently graduated from Centonomy. She and her husband separated eight months ago, at which point she realised she had nothing. She had been living a ‘champagne lifestyle’ (which literally included a glass of champagne every now and then) in which all her bills were catered for without her ever worrying about the cost of her purchases and splurges. She was even extended on her husband’s credit card which she used for entertainment expenses. When they separated, the card went with him – and she suddenly found herself saddled with all of her own expenses.

FINANCIAL SITUATION

I have seen many people trying to deal with the consequence of their ‘somehows’. University students whose parents can no longer afford fees; bills that still have to be paid in spite of retrenchment and job losses. Medical emergencies. Cars repossessed and homes auctioned. People avoiding various entertainment spots because tabs have accumulated.

Sadly, we are so good at showing people how well we are doing though deep down we recognise we are one step away from disaster. Then, instead of focusing on improving our financial situation we focus on proving how well we are doing. For a while Susan tried to borrow money from her parents to show that she was OK, the same way people take comfort in having a nice job and a salary even though they actually live pay cheque to pay cheque. Instead of reducing expenses, saving or investing so that they can survive three months without an income, they would rather spend a huge chunk of it on proving to the world that they have made something of themselves. They are so many poor people walking around in designer clothes, cars, phones, homes keeping the company of similarly impoverished designer friends. Those are the people I call the poverty support group.

So, do you want your life to be controlled by that one disaster? Even if you enjoy looking like success, do you want that to be dissolved at one go? If not, investing is not a choice. It is a necessity. It is not something you do in your free time, when you have extra money, or when you have made it. It is not what you do with left over finances. You must go out and look for opportunities to invest. Become the CEO of your life and take control. Investing is the journey between that one move from disaster and real financial freedom.