Creating Wealth in Kenya: Growing wealth may not always seem like rocket science. But there are certain critical financial principles you must adhere to enroute to wealth creation. Today, we list these principles as explained by personal finance coaches:
Percentage vs Amount: When it comes to saving money, put a bigger emphasis on the percentage rather than the amount. This will help you accelerate the amount you save regardless of increases in your earnings. “You might be saving a big chunk of your salary, but all this will amount to nought if your saving percentage does not grow hand in hand with your income,” says Eric Roberge, the founder of virtual financial planning company, Beyond Your Hammock.
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For example, you could be saving Sh. 5,000 out of Sh. 15,000 earnings every month. If your earnings grow to Sh. 20,000, your savings should also increase from Sh. 5,000. “If they don’t, then it’ll mean that the increment is being swallowed by lifestyle inflation,” says Roberge.
Your money choices: The biggest hurdle you will probably encounter in your quest to improve your financial position is monetary choices, decisions, and implementations. “The total sum of your current financial status is made up of decisions and choices that you have made and until you take responsibility for it, nothing is going to change,” says Waceke Nduati-Omanga, a personal finance coach and the founder of personal finance platform, Centonomy.
Work with what you have: It is easy to forgo the task of creating wealth when your income is low. But you do not have to earn a six figure salary in order to grow your wealth. Neither should you wait until you can figure out what is the best investment vehicle to put your money on. Instead, start early by understanding and optimizing your cash flow. Then find the right balance between investing and paying off debt to make the most out of your salary. It will also be prudent to also open a savings account that is separate from your daily transactional account.
Master the rules: Financial advisor and the author of The Millennial Money Fix, Douglas Boneparth, says that you must master the rules of cash flow in order to get a handle on your personal or business cash. “This means you should have a firm grasp on all financial concepts such taxes, deductions and remittances that connect or relate to your personal and business finances,” he says. For example, there are too many people who are reeling from heavy fines simply because they don’t know their tax obligations such as withholding taxes which can fall beside other normal salary taxes.
Be financially intentional: It does not matter if you think that your finances are in the right shape. Be intentional about every coin that comes your way. This will require you to spare some time when you can sit down and thoroughly review your spending habits and general financial position. Know the total value of your assets and the total value of your debts. “ You can book a day in your calendar every month when you can review your finances by looking over all your spending, your accounts, and your net worth. This will constantly exert pressure on you to keep your money habits in check,” says Roberge. Creating Wealth in Kenya.
