Random Stuff

Finance 


Am passing time walking down the streets of Google hopeful that I will bump on some billboard that reads “Your financial woes stop here” Why? Coincidentally, the financial gods have been gloomy thanks to the “can we talk after Elections” rhetoric. But mostly because we had promised the BizHub Enthusiasts that this week we are putting together something on Finance in this week’s episode for them. Unfortunately, the speaker; some badass guy in finance shoots up a late hour reply that says he’s not available for this week’s episode. He pens off with a bucket of apologies. I can see him penning that from his desk one hand on chest. It’s so sincere. 

For those of you new here, BizHub is that our weekly youth based Talent mentorship initiative by TWIC where we meet in some down town hotel and deliberate matters Business. So am left wondering what do you tell a bunch of Entrepreneur’s about finance at a time when the financial gods are just as tantrumous. I come across tons of write ups on this subject matter. I can’t bloody decide which one fits the bill. However I bookmark this and choose to adopt it:

And so today I decided to talk about financial discipline. Focusing more on habits that literally rob you of your hard-earned money every day.

Financial discipline in life is one aspect that most people don’t get to muster in life. In school, you are taught a wide variety of subjects but not financial discipline. Most people are poor not because they lack a source of income, but because of some poor financial habits that empty their pockets everyday without them realizing it. It’s self-robbery without violence.

So here are the most common 7 habits that literally drag you to the poverty hole every day:


1. Spending more whenever your income increases.

Are you one of those guys who shift to bigger houses immediately you get a salary increase or shift from beer to Ciroc on your weekend night outs? This is the most deadly mistake you are making in your life and it will slowly lead you to a life of poverty.

If you ever get an increase in your income, the best thing to do would be for you to maintain your status quo and invest the increment. You can increase your savings in your Sacco or invest in shares at the stock exchange.


2. Too young to save.

For those of you who’ve worked for some time now, do you think it’s easier to save now than before?

As life continues, you tend to get more responsibilities that eat up into your income. There’s the young family that you’ve just started that needs food and clothing. Plus school fees for the kids.

It’s much easier to save more in your career than later in life, so start saving now before more responsibilities catch up with you.


3. You only live for today and forget tomorrow.

History has repeatedly taught us that life is not a smooth sail. There are a lot of ups and downs. Today you are well and healthy, tomorrow you are sick and bed-ridden. Today you have a job, tomorrow technology replaces you. So why do you live like tomorrow will always be a smooth patch?

Live today but also think of tomorrow. Always put aside a percentage of your earnings as savings before you even begin spending.


4. You rely entirely on linear income

Linear income is your monthly salary or your weekly wages. They only flow as long as you are working. The moment you stop working they also stop. This kind of income will never make you rich. Riches are made from passive income.

Passive income is the money that keeps on streaming in even when you stop working. Think royalties from books that you’ve published or CD sales and downloads from your music. Think dividends from stocks investments, think views from youtube videos that constantly bring in money.

Do you have a passive source of income that you can rely on for extra income, or that can sustain you when the human resource department suddenly comes calling?


5. You are a complainer and not a solution seeker.

You won’t get anywhere with constant whining. If every day you complain about the lack of money to start your business then you’ll remain wherever you are. Why don’t you for a moment stop complaining and start looking for solutions to your problems.


6. You don’t budget

You may think you have all calculations of your monthly expenditures in your head but you don’t. How many times do you find yourself entering a bar after work without having planned for it? How many times do you find yourself buying shoes and clothes on impulse after seeing them well displayed in stores?

All these weren’t planned and even though it doesn’t seem much in a day, it does add up after a year.

For the men, say you spend an extra 1000 shillings every weekend on drinks, like buying a round for your friends. That adds up to shs 52,000 at the end of the year. Isn’t that enough to pay fees for your primary school kid?

Make a budget and stick to it to avoid small unplanned money leakages.


7. Waiting for the lottery

More than 50% of the ads that I see nowadays are about betting and winning the lottery. I think these companies have discovered how to take advantage of the greedy nature of humans. We all want to win and be instant millionaires. But remember its called winning a lottery because for every winner there are a million losers. What do you think is the probability of you being one in a million?


Final word.

In your quest to get free from the shackles of poverty, remember not to be too hard on yourself. Live a noble life and be happy even on a budget.

BONUS

How to Maintain a Good Credit Rating

The dictionary definition of credit rating is “an estimate of the ability of a person or and an organization to fulfill their financial commitments based on previous dealings”. Indeed in the current dynamic economies, its worth for everyone to take time to manage and make good their credit score. It long ceased to be all just about as to whether you can get loans, credit cards, and mortgages. It affects bank accounts, mobile phones contracts, monthly car insurance and so on. Offered here is a summary of what maintaining a sound credit rating might involve

Make key payments on time
The argument might be we work to pay bills or rather bills get us working. Take house rent for example, some real estate agents charge commissions as high as 30% for late payments with the rate doubling for cases of non-payment. Such can be avoided by prompt payments.

Credit debit cards debate
Everything has the good and the bad. Money matters, credit cards put at your disposal money that is not yours to use now and pay later. For debit cards on the other side you only consume money you have earned. Credit cards have huge bearing on credit rating, most allow up to sixty days interest free period after which defaults attracts exorbitant penalties.

Banks, banking and  Loans
Banks exist as a balance between surplus savers and deficit borrowers. They thus hold huge chunk of information (presented in bank statement displaying ones banking transactions in a span of say six months period or there about ) in as far as credit rating is concerned.

Credit Bureau Reference
Denoted as CBR; its directory of peoples credit history accessed at a click of a button. The rule here is simple, make financial obligations just in time visa vis managing debt income ratio. Serial defaulters are blacklisted and barred from accessing financial services.

Alternative income channels
It’s advisable to have at least two channels of income since overdependence on one for instance predisposes you to not meeting financial obligation deadlines when liquidity is not guaranteed.

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