PERSONAL FINANCE: The cost of wealth creation

Nothing is free. Everything costs something – and creating wealth is not an exception. However, we want the prestige, influence and success that comes with wealth without truly appreciating the price one has to pay for it.

I once attended a talk titled ‘The Billionaire Mindset’. The guest speaker said that to make a billion you have to assume the responsibility of managing a billion, thinking in billions, dealing with billion-shilling problems, borrowing in billions, negotiating in billions, losing billions and having sleepless nights over billions. If you cannot manage your Sh100,000 problem, you will not be able to handle a billion. That level of responsibility is what it costs to create wealth. So what’s the price wealth creators have paid?

Time. The billionaire above and you have the same 24-hour day. If you had a billion-shilling empire, what do you think you would spend time on? Do you think the wealthy are busy on social media or forwarding irrelevant messages to each other? Wealth will cost you time, but where, exactly, do you need to invest that time? Mary* decided that she wanted to live her desired lifestyle and figured out that her current job would not be enough. She bought a tuck shop. Mary would wake up at 3am everyday so she could have snacks ready to drop off at the shop before reporting to work. Fast-forward several years and several different investments later: She is wealthy. The wealthy spend time productively.

Relationships. I once wrote an article about the poverty support group. Creating wealth will cost you that group. Tom* was a banker but left two years ago to start his own company. At the bank, his social circle was made of his peers and some friends. Their point of connection was the bar. They would meet once or twice weekly, drink and talk about what other people were doing – what somebody had bought or stolen, or did or did not do, as well as how bad the economy, their employer and their lives were. When Tom quit employment, the first thing he had to let go of was the friends. First of all, without a salary he could not keep up that entertainment lifestyle. He also realized that his responsibilities did not afford him the luxury of these conversations. He had employees to lead and pay, a business to grow, supplies to deal with, money to collect and a family to raise. Talking about politics and the government did not put food on his table. He left his poverty support group. Now he sees them once in a very long while. Are there relationships that may be toxic to your vision? That will be your cost – and remember, you cannot please everybody.

Comfort zone. You cannot create wealth in a comfort zone. ‘Regular income’ is a comfort zone, and you create it with relative ease. But if you want additional income or more, you have to go beyond ‘regular income’. This requires you to get out of your comfort zone. Our jobs or businesses can become comfort zones if we don’t continuously push ourselves. The way we invest can be a comfort zone. There are people very comfortable buying land but will not buy shares. That would require something different. We stay in our comfort zones because when we step out, it is scary. The price to pay for wealth is not only the comfort zone but the relationship with fear.

Money. Creating wealth will cost money. It doesn’t have to be a lot of money, or all at once. The key thing to remember is how you interact with money. The benefit of consumption is seen today but the benefits of wealth creation will be realised later. You may have money to buy a car today, but investing that money will give you more to buy a better car tomorrow. You may get a different job that pays you more today but your current job offers longer term opportunities where you could earn more. Wealth creation and consumption cannot compete. So, are you ready to pay the price?

Finally, remember this: The wealthy do now what most people won’t so that they can live in a way that most will not be able to.

Waceke, runs entrepreneurship and wealth creation courses. For details, get in touch at [email protected].