Before you upgrade your car…

It’s important to understand what wealth is and isn’t. Elvis learnt this the hard way. He bought a car for Sh5 million three years ago.

Unfortunately, he lost his job. Things did not pick up quickly in the business he started and he had to make a lot of changes to his lifestyle. One of the things he did was sell his car… for Sh2.5 million.

Already, he has made a significant loss on the car. Given his current lifestyle and commitments (house rent, food, school fees, loan repayments etc.), he will be able to survive on this money for six months.

Before he lost his job Elvis had never thought of this. Like many people, he just expected the gravy train to keep moving. He now wishes he had the Sh5 million he spent on the car.

He would have survived a year based on the same calculation (giving him time to grow and work on the business) and maybe even made some fruitful investments.

The decision to purchase the car is not necessarily wrong, but Elvis now admits that it was impractical. Is the car worth the risk of not being able to feed oneself? Could he really afford it despite the money being available at the time?

We spend money we think we have yet we really don’t think through whether we can take the risk and afford it. Wealth is what works when you are not working, not what you are driving while working.

THEY CHEERED HIM ON

When Elvis bought his car, people cheered him on. Nobody does that when you buy a piece of land, start a business, take up pig farming, etc.

He also felt good. These ‘good feeling’ emotions cause us to pursue purchases in order to feel it, and for many of us, it is the aftermath of the cost that jolts us into reality.

How do we get past this? We must learn to delay gratification. In other words, have the courage to say ‘No’ to yourself. We also need to have the strength to say ‘No’ to other people.

We get subtle pressure from others without realising it. It may be your employer, family, spouse, friends. You must learn to say no to them.

Finally, have an objective bigger than the car because that is what will keep you from spending money you don’t have.

Many people claim to have goals but they don’t make it specific, time bound and measureable. A goal that doesn’t change how you act or think in the present actually isn’t goal but wishful thinking.

Do you have bigger goals than the car? If so, how will buying the car affect them? Is the car worth delaying them or can you really do both? We spend a lot of money looking wealthy while in really ensuring that we do not invest in the things that make us wealthy.

Besides the purchase price, do you know what that new car will cost you? As much as Elvis bought the car with his own money, because of his position at the company he worked for, it was fueled, serviced and maintained for him.

They also catered for the insurance. Once he had no consistent cash flow coming in, he understood the dent fuel made in his life. One of his breaking points was when he found himself having to make a choice between fuel and school uniforms.

There is nothing wrong with upgrading your car but use the lessons Elvis has learnt and really evaluate if you can afford it. Maybe the time is just not right. It doesn’t mean that you will never do it. Our lives will actually move on quite well without the things we think we need.

***

Waceke runs programmes on entrepreneurship. Get in touch with her on [email protected]|Facebook/WacekeNduati| Twitter@cekenduati