“Don’t ever take loans! Save up for what you want then only buy it from your savings, in cash.”
Someone once shrieked this to me while we stood around the water dispenser. I was 25 at the time, working in corporate audit at my first job. I’d told her I want to take a Sacco loan to buy my first car.
Then she shrieked. It’s as if I’d told her I want to pierce my eyebrows and dye my hair purple.
She threw me off, to be honest. The Toyota Premio I wanted to buy was about Sh500,000.
If I diligently saved Sh15,000 a month, it would take me three years – rather, 33 months – to save up enough money to buy the car. In cash.
In retrospect, it was bad financial advice. It was bad because that meant the reach of my dreams and ambitions would be limited to how much money I could save.
NOT AN ENTIRELY TERRIBLE THING
I’ve since learned from personal experience that taking loans is not an entirely terrible thing. What matters is what I’m taking the loan for, where I intend to spend the money. Am I building up good debt or bad debt?
I’ve also learned that it’s very important to be liquid. It’s not wise to tie up cash in an asset you can’t liquidate in the snap of a finger. Putting all my cash savings in a car would compromise my liquidity position. I couldn’t help anyone in the event of an emergency.
I asked a handful of my friends some of the worst financial advice they’ve been told or overheard.
This is what they said:
“Someone one told me that having a job is good because you can take a salary advance each month.A salary advance is an unending cycle. Instant mobile loans are like a salary advance for the unemployed. I know now that if I can’t pay for something in cash, then I can’t afford it. So I leave it alone. I will buy it when I can.”
Magdalene,38, Personal fitness coach
“I'll share two pieces of bad advice. A few years ago, when I was 21, one guy told to ‘invest money in online forex trade.’ He showed me projections for a whole year. I was going to make a juicy monthly ROI [return on investment]. He'd be my trader. I made an investment of $1,000 and lost all my money after a few months.
When I asked for my money back, they told me the company closed.
“At 25, some motivational speaker told me, ‘Don't be a job seeker, be a job creator. You can quit your finance job and use your savings to start a business that'll succeed.’
I quit my job to start the said business. I was cash strapped by the second month. God knows how fast I ran back to look for a job.”
Eugene,29, Financial consultant
“An acquaintance once told that I should never buy a car before I’ve bought a house. I think a car, even for personal use, is a good investment. Especially if you are in a family of many. Buy a car you can afford to maintain. Don't let your inability to own a home in that moment keep you from the convenience of owning a car.”
Janet, 31, Author and speaker
“We’ve always been told that money is the source of all happiness. I've come to see for myself, with my own eyes people who can afford everything – big mansions, vacations etc. – and are not happy. And I've come to see people who don't have much but are content and happy. Money is an outward resource yet happiness is an inside job."
Ruth, 30, Chef
“I’ve heard a lot of bad advice.‘Just save it.’ Like just save, and then what? ‘Don't put your money there. It's too risky.’ ‘Stock markets are unsafe.’ ‘Money can't buy you happiness.’ Um, yes it can, Patrice. You just need to know where to shop.”
Frank, 23, Copywriter
“I was 24 and starting to make my own money when someone – I don’t remember who – told me I should live for today and that tomorrow will take care of itself. It really was the worst advice I’ve even been told because, c’mon, you need to save and invest for the benefit of your future.”
Gathoni, 26, Journalist
“‘We can always make more!’ That was the worst advice. One of my business partners told me this when I was 25 and we made our first Sh1 million. We split it three ways.
They convinced me how easy it was to make millions, that I could do it again whenever I wanted. I think it was just luck, though, that the job worked out and we got paid. I’m now 33 and walking around thinking that everything I dedicate myself to will work like that first million-shilling job worked. It’s probably why I need therapy.”
Sharon, 33, Product developer
“The worst advice I've ever got is to go big every single time when investing. Granted, you can invest and there’s a high chance of having great returns. But there’s also a chance of having no returns at all. Or negative returns. I suggest you test the market first.
Go in with your cold feet, it’s OK. I’ve since learned to start small and grow big. That’s actually my personal mantra when investing – Start small and grow big.”
Bill, 29, Car dealer
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