PERSONAL FINANCE: Who does your money work for?

You can spend money on yourself... or you can give it away to all the status symbols you are a slave to. PHOTO| FILE| NATION MEDIA GROUP

What you need to know:

  • Our problem is that we have become prisoners of expenditure. We work for our expenses, not for ourselves.
  • Success for many people means what you are seen purchasing, rather than what you are achieving, and that’s where the prison is.
  • That’s where we become the servants of expenditure. We borrow rather than save for it. We overpay for convenience.
  • We must travel overseas for holidays, move into a bigger house, and buy a holiday home on top of it. I have a friend who was once pressured by his immediate bosses to upgrade his vehicle.

You will never manage money well or create wealth when all you do is work for other people. It does not matter how much you earn, inherit or are given; it will ultimately go to other people if that has been your conditioning.

No, I am not talking about employment; even business people are guilty of working for others. My question is, where do your earnings go? That is the real beneficiary. There is a graphical illustration I show in my classes. We look at annual earnings and start deducting months based on who you are paying. For most of us, 30 per cent goes to tax. That’s three months of your annual earnings. There’s nothing we can do about that except to vote wisely. That said, we have some control over the rest – but we don’t exercise it.

Another 20 per cent goes to rent or mortgages 10 per cent to transport; 15 per cent to school fees and related expenses, 20 per cent to food and household items, and 10 per cent on other bills such as electricity, domestic help, water. Then there is entertainment – another 15 percent. Phone expenses, Internet, emergencies, and so on may take another 10 per cent. Let’s not forget our debt payments. Suffice to say, we usually run out of months before we finish itemising all our expenses. Do this for yourself and see, or send me an email to join an online platform to see this illustration.

Will your expenses master you or will you master your expenses? Never, unless you make a conscious decision to end it. It does not matter what you earn. Sh50, 000 will put you in the same rat race as the one who earns Sh500, 000. Expenses will always go up, and there will always be shiny things for you to buy. Similarly, it is not the responsibility of your employer to keep up with your expenses.

PRISONERS OF EXPENDITURE

Our problem is that we have become prisoners of expenditure. We work for our expenses, not for ourselves. Success for many people means what you are seen purchasing, rather than what you are achieving, and that’s where the prison is. That’s where we become the servants of expenditure. We borrow rather than save for it. We overpay for convenience. We must travel overseas for holidays, move into a bigger house, and buy a holiday home on top of it. I have a friend who was once pressured by his immediate bosses to upgrade his vehicle. This is how prisons are created. Don’t let other people’s prisons become yours. That’s a recipe for poverty.

So what must we do? Become intentional about letting your hard-earned money actually play a part in working for you. This means thinking about what you want to achieve with the financial resources that are going to be put in your hands. Will you be completely satisfied with continuously having the latest phone, car, home furnishings, clothes? If you manage to take your children to the best schools in existence, will that do it for you? Are you covered if you travel round the world on a first class ticket? Do we think that when we have all these things that outwardly project success, then we will be able to get our act together and make money work for us?

Our hard work can’t be just about keeping up with rising expenses and social expectations. Wealth is what works when you are not working. Is a significant portion of your money also going to that or are you too distracted with the latest gadget? Also, what impact do you want to have beyond yourself? As far as spending goes, what do you feel is valuable enough for you to spend on?

There’s no right or wrong. Making money work for you is intentional. It’s choices that you make, not luck. Take some time and think. Who do you want your money to truly work for and what does that mean to you?

For more help on debt, visit Debt Makeover by Centonomy on Facebook or email [email protected] to find out how to enroll in a debt programme.