“Money isn’t the most important thing in life, but it’s reasonably close to oxygen on the ‘gotta have it’ scale” – so said Zig Ziglar. So the question follows – how does one make money, and loads of it at that?
Visionary thinking
People who become rich are usually those who are able to see ahead of the curve – those who identify opportunities and take action to fill a gap.
People may not always know they need something until it is presented to them. Steve Jobs, founder of Apple was quoted as saying: “A lot of times, people don’t know they want something until you show it to them.” Just think about it – before the entry of the tab, we were content with laptops; but with the advent of the tab, laptops have somewhat taken a backseat and tabs are now the new normal. The same goes for mobile phones. People did just fine without them two decades ago but now, people are almost unable to function without their mobile phones.
When Java Coffee House first started, many people dismissed it as it was seen as an expensive coffee house that was out of reach for most Kenyans – but look at Java today. The word Java has become generic – when you want to meet up with your friends for coffee (or a meal), Java instantly comes to mind. It can be argued that one of the reasons it has been able to grow to such heights is because the owners saw a need – people will always need a place to meet for business and pleasure – and the unique selling point for the restaurant was (and still is) that they offer pleasant ambiance, and a good selection in the menu that is more or less standardised and offered at a fair price.
There are countless other tips out there on how to become a millionaire. However, this article focuses on the things that are preventing you from becoming rich.
1. Peer pressure and bad company
When you were growing up, competition was seen as a good thing, and it ensured that you put your best foot forward. For example when in primary school, you and your friends probably competed not only in sports, but also in academics – you challenged each other. When your friend said they wanted to go to a national school, you too worked hard to make it to one, and it was all in good spirit.
The problem is that same competition spills over beyond school and into career and life. Friends who once engaged in friendly competition now fiercely compete to outdo each other. It turns into a keeping up with the Joneses affair – when your friend buys a 2,000cc car, you go out and buy a 3,000cc car; when your friend buys the Samsung Note 4, you go out and buy an iPhone 6; when your friend gets promoted to a managerial position, you vouch for the director position at your firm. It becomes a ‘who has bigger, more expensive stuff’ affair and you lose sight of your initial goal, which was (or should be) to become wealthy. You end up wasting money you could have invested busy trying to outdo others, and never end up becoming rich because you acquire what one personal finance expert terms as “flossets” (from the word floss) instead of assets.
“Your network is your net worth” – you have heard that saying? Even if you are not keeping up with the Joneses, if most of your friends consist of people who have reckless spending habits, you are sooner or later going to find yourself having bad spending habits as well; because as Jim Rohn said, “You are an average of the five people you spend most time with”.
2. Cultural issues
Your background and culture can have a bearing on whether you become rich or not. For example, there are people who grew up in families where they saw their parents or guardians spend all their money and live pay cheque to pay cheque. These people grow up thinking that they do not have to save, and focus on taking care of expenses as they come. Even when they realise the folly of their lifestyles, it becomes challenging to change the habits they grew up with because old habits die hard.
There are other people who come from cultures where there is a strong sense of family – where the grandfather of your aunt’s cousin’s sister is considered to be family, and therefore you are required to be your brother’s keeper and help where necessary. People who grew up in such households saw their parents accommodating their extended family in their house, paying school fees for relatives, chipping in in medical bills of distant relatives and the like. Therefore, they may do the same thing when they start their own families. The thing is, relatives usually know that one person who is gullible and will take advantage of such people, always asking for money. It is good to give; but if there are no balances and checks put in place, someone may never get rich because all their money goes to helping others.
3. Bad investment decisions and short-sightedness
There is no doubt that if you want to get rich, you are going to have to invest. The problem is, however, that some people just adopt a laissez-faire attitude to investment, thinking that their investment will miraculously grow without having put some thought into what investment was being chosen. You hear that there is money in farming, so you buy a 40 by 80 plot and start planting strawberries without even researching on the cost implications and expected returns.
There are others who look for get-rich-quick schemes. They hear there is demand for quail eggs, and they immediately go sourcing for them – only for the business to collapse and they are stuck eating quail eggs for breakfast, lunch and dinner. Think about the pyramid scheme scam that happened between the years 2006 and 2007 in Kenya – there were more than 270 pyramid schemes. People lost millions of shillings in these schemes they believed would double their investment, leaving them with no money. When the deal is too good to be true it probably is; so, be careful.
If you do fall prey to a scam, accept the situation, dust yourself and move on, albeit wiser. In the world of investment, you win some you lose some. It happens to just about everyone, even millionaires and billionaires lose some money while trying to make some.
4. Financial illiteracy
Are you able to say with confidence – without having to think too much about it – how much you spend on average in a month or are you clueless? Do you have a budget that you stick to and do you keep records of what is coming in and going out of your accounts? Are you the kind of person who takes out a loan to fund your expenses?
If you are ever going to be rich, you have to understand how money works, how to earn it and manage it. It requires discipline. Are you ready to make discipline part of your vocabulary, or would you rather be undisciplined and live a mediocre life? Take time to understand your financial decisions. When you take out a mortgage to buy a house and you are told that the interest rate is 15 per cent, do you really understand the implications of that? How much will you end up having spent by the time you have finished servicing the loan? What will likely be the value of your property at that time? Will it be lower than the total amount you put into buying the house through a mortgage? Was it worth taking the loan or would you have been better off saving up to build your own house at your own pace? Take time to gain financial literacy.
5. Your attitude
Are you one of those people who are ever saying: “I am broke” or ‘do you think money grows on trees’? Do you have a negative view about money –that all those who have money must have stolen it or got it through unscrupulous means? Is the idea of living a comfortable life foreign to you? If so, then you are probably never going to become rich. Henry Ford said “whether you think you can or you think you can’t you are right”. How your life turns out largely depends on your outlook. Words have power. If you keep on speaking negatively about money, money will develop a negative attitude towards you too and evade you. Stop having a bad attitude towards money just because you do not have it at the moment. Instead, start thinking of ways you can make money.