Pius Muchiri Mugo is the Managing Director at Nabo Capital. He recently shared five steps to achieving financial freedom, which he profoundly labelled the ‘5Ps to Financial Freedom’.

A majority of people want money to work for them. This is the true definition of financial freedom. One can attain financial freedom with nothing to save or invest.

“Financial freedom is when you get to do, what you love to do, every single day of the year,” he stated.

Here are the 5 steps the Nabo Capital founder prescribed for this journey:

1. Package Yourself

Everyone has a gift or a unique value proposition worth something. Once identified, it is important to have an elevator pitch. Everyone is selling themselves whether knowingly or unknowingly.

One can have the best credentials in a room, but if poorly packaged, they will not attract opportunities their way. Another man can have average credentials, but if well packaged, opportunities will come flooding.

Should the pitch be successful, you will get the opportunity to work, where you give value and in return, get a paycheck.

2. Pay yourself first

We go to work to mobilize capital, not to pay bills. If you pay bills with all you have been earning, you have committed your life to poverty.

He once created a pie chart of how his salary was spent, and figured that most of his money was going to paying rent bills and entertainment. However, none of the categories had his name labelled. He decided to create room for his name.

“If you do not pay yourself first and lack passive income, you are committing yourself to poverty…The greatest real estate on earth is you,” he stated, adding that it is important to invest in oneself.

How to pay yourself first? He noted that one can open a money market account, where they deposit money which will grow until they are sure of what to do with it.

Through this, you’ll have saved (paid yourself) and invested (MMF returns) thus killing two birds with one stone. Another important way of paying yourself is investing in your health and knowledge.

“If you’re not paying yourself, you have committed your life to poverty. It does not matter how much you earn, whether Sh. 100,000 or Sh. 10 million…20 years from now you will still be in the rat race.”

3. Production

Pius Muchiri quoted Elon Musk who once said that the richest folks in the world use money to produce goods and services that solve the most difficult human pain points.

They are unlike ordinary people who use money to pay bills and indulge in entertainment. He asserted that this was a matter of mindset.

“If your idea of money is wrong, you will never get the game of money right. So, your mindset about money must change,” he stated.

In fulfilling step 2 and having grown your savings, opportunities will begin following you.

“I am not saying you stop consuming. It is good to enjoy life. But you must be involved in production if you want to see your life change drastically,” he said.

“Wealth creation is an art of production, not consumption. Your job will make you a living, but production will make you a fortune,” Muchiri emphasized.

Summarily, he recalled one of the things he’d say to himself long ago; ‘If you want to be rich, impose yourself on other people’s budget’

Pius Muchiri: Founder of Nabo Money Market, interest rates, joining procedure

4. Portfolio

He advised his audience to turn their cashflows into a portfolio, which he likened to building a storehouse. He said that a job is a workplace but the portfolio is a storehouse and the most potent differentiator in a person’s life.

“Your portfolio is an assembly of ammunition of assets that generate a constant stream of cashflows without you having to show up to your workplace.”

This money accumulates in the bank account without need of oversight. He gave an example of Warren Buffet, who was once discovered in a survey to be earning $1.5 million an hour, including when he was asleep.

Muchiri noted that this was the sweet spot where all logical human beings dream of being.

5. Passive Income

He defined the last step as money showing up at the bank account without the need of one showing up to work.

“If you have to show up at work, for money to show up to your bank account, then you’re running on something we call active income,” he stated.

Entrepreneurs running businesses who cannot afford to take a holiday break of between 6 weeks and 6 months have active income. He noted that it is possible to turn around the business state from an active to passive, by observing steps beforehand.

This is the final step to unlocking financial freedom. It involves waking up and doing what you love every single day of the year while money trickles into your bank account.

“Your job is your side hustle, but your portfolio is your core business. Your children will not inherit your job, they will inherit your portfolio,” he concluded.