12 tricks to help you save and reach your financial goals faster

There is always an opportunity to save money to help you reach your goals faster. Here are some tricks you can use to help you save a little bit more if you are having difficulties finding money to save or in addition to your regular savings schedule 

1. Save automatically before you spend. 

When you get your income, before you do anything else, deduct your savings and put them into a savings account. To make it even easier, set up a check-off system from your employer (payroll department) to a money market fund or Sacco savings account or set up a standing order from your current/salary account to a savings account so that money is deducted automatically from your main account and transferred to your savings account before you touch it. Saving automatically is the best way to save without a struggle. 

For those who pay income tax (pay as you earn/PAYE), doesn’t the government take off 30% or so before you even touch your salary? And after the government and NHIF, NSSF, insurance, loans and everyone else has taken their cut, they leave the rest to you and you learn how to budget around it. Why not include yourself in the group of people who get their cut first, before you distribute what is left to your landlord, school and all those other people who are waiting for a chunk of your income? 

If you say that you will save after you have finished paying the bills, you will never have any money left to save, so prioritise and automate your savings. 

2. Save your loose change. At the end of every day, I empty my purse and divide the various coin denominations I find in there into two. For example all 10 bobs are put into two piles, then all 20 bobs and all 5 bobs. The first pile goes back into my purse, and the second pile goes into the piggy bank I use for saving coins. When it fills up, I top up if I need to and transfer it to my money market fund account.

 

3. Save all 50 bobs or all 100 bobs that pass through your hands. Just like in (2) above, you can decide to save all the Sh50 or Sh100 or any other denomination of your choice that pass through your wallet. 

4. When you finish paying off a loan, don't stop. What do I mean? Take that money you've been paying a loan with and set up an automatic standing order to a savings account or set up a check-off system to a money market fund. So say you've been paying Sh5, 500 for a loan every month and you have just finished paying your loan, instead of finding ways to spend that Sh5, 500, start saving it, preferably using an automatic standing order or check-off system. If you save that Sh5, 500 you used to pay your now paid-up loan with for 12 months, you will have Sh66, 000 to help you reach your savings goals faster. 

5. Save your salary increment. If you get a raise (salary increment) at work, instead of adjusting your budget/lifestyle upwards to absorb that money, continue living on the same amount you were living on before (as if you are still earning the old salary) and save the extra amount your employer has given you. So say you get a Sh6, 000 raise, you can set up a standing order to save that money automatically and in 12 months, you’d have Sh72, 000 in savings. This is the same principle in number (4) above. 

6. The same applies to if you “find” money. Finding money means getting money you were not expecting, such as a refund, a discount, reimbursement of costs by your employer, or even finding a Sh1, 000 note in a trouser pocket you had forgotten long ago. Instead of using that money, put it directly into your savings account without second thought. 

7. Save your lunch money. Carry lunch to work a few days a week and save your lunch money. For instance, if you usually buy lunch at work for Sh300, you can decide that on Mondays and Thursdays you will carry lunch from home, so that week, you save Sh600 and put it into your savings account. You could decide to carry lunch three days a week, so that week you'll save Sh900. You could decide to carry lunch the whole week, so that week you'll save Sh1,500 or more.

 

8. Save your fuel. You could do the same with your car. If public transport is cheaper than using your car, you could decide that three days a week, you'll take a matatu home and save the amount you would have spent on fuel on those three days. You could also decide that that whole week, you'll take a matatu and put the amount of money you would have used on fuel into your savings. 

9. Do a spending fast. In religious circles, to fast is to abstain from food/eating for a specified period of time during which one says fervent prayers for a specific purpose. You can apply this principle to personal finance to help you save. This is basically the principle behind point (5) and (6) above and it basically means cutting off everything that you don’t need to survive and saving the money that you would normally use on the non-essentials. 

To be able to do a proper spending fast, you have to first know where exactly all your money is going -- every last coin -- so first track your expenses for a month and then evaluate what you actually need (essentials/things that you honestly cannot live without) and things you can actually do without. 

Once you see where exactly your money is going, you can cut back on the non-essentials and the money you save by not spending, should go directly to your savings account. This could mean carrying lunch instead of buying lunch every day (if you carry lunch from home for a full month, and you usually spend Sh300 on lunch every day, you’ll be able to save Sh6, 000 or more that month. Put it into your savings account). You can also cut back on coffee and alcohol, you won’t die without them (unless you are addicted). Say you spend Sh3, 000 on alcohol every weekend, if you decide to reduce that amount to Sh1, 000, you will save Sh8, 000 that month. If you decide to do an alcohol-free month, you will save Sh12, 000 that month. You can even decide to do without DSTV for a month, you won’t die from not watching pay TV. 

I’m not saying that you shouldn’t have fun; saving is not all gloom and doom; on the contrary, if you learn how to optimise your spending, you will not only have more fun and less stress, but you will also be able to achieve those things you only used to dream about, but thought that you could never afford them. 

Secondly, if you do your spending in moderation and do your spending fast for limited periods of time (rather than forever -- that would make you a miserable miser), you will find money to boost your savings. (We’ll talk about having fun while still being able to save in another post.) 

10. Carry only the exact amount of money you need. This goes hand-in-hand with the spending fast. So say my fare is usually constant at Sh200 for the trip to work and back and I use Sh200 for lunch, that day I will carry exactly Sh400 in my purse or Sh500. I will make sure that my Mpesa balance is zero (and resist the temptation to opt into Fuliza), that my bank accounts are not linked with mobile money, so I can’t transact from my phone, that I don’t carry ATM cards, etc. This means that even if I am tempted to buy things on impulse, I simply cannot because I don’t have any money on me to spend. (We’ll tackle impulse buying in another post). 

11. Round it up. When you buy something and the cost does not end in 0 (zero), save the amount of money it would take to get the cost to end with 0 (zero). For example, if you buy something costing Sh42, put the 8 bob change in a piggy bank or transfer an equivalent amount to your Mshwari Lock account. If you use a piggy bank, when it fills up, you can transfer the full amount to your savings account or money market fund. 

12. Lastly, make it difficult to access your savings. A savings account without a debit card (ATM withdrawal card) and with limited withdrawals, is best. I have a Sacco savings account that only allows you to withdraw money at the end of the year. 

I have a money market fund account where withdrawing money takes like three days and where the first withdrawal is free, but subsequent withdrawals are charged Sh1,000 per withdrawal. 

When I think of paying Sh1,000 to withdraw, I just let my savings be unless I have actually accumulated the exact amount I need to meet a certain goal, then I can withdraw and pay for my goal without feeling the pinch. So do whatever it takes to create a barrier between you and your savings, to make it hard for you to withdraw your savings anyhow and any time. You are saving for a purpose and you cannot achieve your financial goals if at all you can withdraw your savings randomly to buy things on a whim. 

I hope these tips help you save more money, and if there are additional tips you use, please share in the comments. Happy saving! 

*These tips were first shared in the 52-Week Savings Challenge Kenya in 2016

Affordable housing in Kenya: How it's going to work

The government plans to build 500,000 houses as part of it's affordable housing project. According to the affordable housing portal (Boma Yangu), this is how it is going to work.

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Kenyans will register and state the kind of house they want and in which county on the affordable housing portal. Right now the registration is to gauge interest and assess needs (what kind of houses people want).

Once you register, you'll get a unique identification number to use to make monthly contributions to the Housing Fund, managed by the National Housing Corporation (NHC).

Making contributions

You can make your contribution as:

1.   Statutory contributor – This is the mandatory contribution deducted by your employer from your salary (1.5%) and submitted to the Housing Fund every month. Contributions are capped at Sh2,500 per employee and employer per month.
2. Voluntary contributor – If you choose this option, you can contribute as much or as little as you want. You can withdraw these funds after five years for housing related activities or after 15 years or upon reaching retirement age (65 years). Your contribution will not be taxed at the time of withdrawal. If you choose to make voluntary contributions, you will not be able to access your money at any time. You will be subject to withdrawal rules (after five years for housing-related projects or after 15 years or retirement age).
3.  Joint contributors – This option allows you to make a contribution towards one house at a time with your husband or wife, but you can each choose to contribute individually. You can also do this jointly with other people towards one house. If you apply jointly, your incomes will be assessed jointly and the title of the house will be issued in the name of all the joint applicants.

You can monitor your contributions on the portal. If your income changes, the contribution made towards the Housing Fund will adjust proportionately to reflect the change.

Will my contributions earn interest?

Your contributions will earn a return every year, which will be announced based on the Housing Fund’s performance.

Allocation of houses

Allocation of houses will start when construction begins. Civil servants, the police and other members of the disciplined forces will get the first right to 30 per cent and 20 per cent of all available housing units, with the rest going to other Kenyans. The allocations will be computerised (done by an algorithm that sifts through profiles in the portal to prioritise those who need the affordable house most). If you don’t get allocated a house in the initial allocation, you will be put on a waiting list and given priority in the next allocation round. You can only buy one house under the affordable housing plan.

Factors to be considered in allocation:

1. When you registered (first come, first served)
2. Your income
3.  Family status (families will get preference)
4. Vulnerable groups
5. How much deposit you’ve accumulated through monthly contributions
6. Your assets
7.  Demand for your preferred type of house

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What kind of house do I qualify for?

The affordable housing scheme targets people in the following income groups (low and middle-income or people who earn less than Sh100,000 per month). The kind of house you qualify for will be based on your income.  

1.  Social housing – Kenyans who earn up to Sh19,999
2.  Low-cost housing – Kenyans who earn between Sh20,000 and Sh49,999
3. Mortgage gap – Kenyans who earn between Sh50,000 and Sh100,000

Those who earn less than Sh20,000 per month will be offered three options:

1.  One-room house at a cost of Sh600,000
2. Two-roomed house at a cost of Sh1 million
3. Three-roomed house at a cost of Sh1.35 million

Those who earn between Sh20,000 and Sh150,000 per month, will also get three options:

1.  One bedroom house (30 square feet) at a cost of Sh1 million
2.  Two bedroom house (40 square feet) at a cost of Sh2 million
3. Three bedroom house (60 square feet) at a cost of Sh3 million

You will be advised on the projected monthly rent-to-own payments based on the 3% to 7% per annum interest rates.

To ensure that those who qualify for social housing are the actual beneficiaries of the houses being built for them, the government plans to verify and register them in their communities. If there is more demand than supply for social housing, those who need affordable housing more will get priority.

How will I pay for the house?

Eligible Kenyans (those who earn less than Sh100,000) can buy the houses through the National Tenant Purchase Scheme (a rent-to-own model). What this means is that once you are allocated a house, you will be living in the house and paying “rent”, but in this case, that money goes towards owning that house, such that once you have paid for the full cost of the house, it belongs to you and you can stop paying rent. The mortgage or home loan will be offered at a fixed interest rate of 3% to 7% per year over a 25-year period. This means that your “rent” will not change/in the 25 years you take to pay for the house.

Monthly costs (service charge)

Apart from the monthly rent-to-own payments, you will also be required to pay an affordable service charge to a company contracted to maintain the facilities including the common areas and to fund major repairs of the housing complex. You will continue to pay the service charge long after you have finished to pay for the house.

What happens to those who earn above Sh100,000?

If you don’t fall within the above income groups (you earn more than Sh100,000), you will contribute to the Housing Fund (remember there are mandatory contributions for those who are employed, and you can also do voluntary contributions), but because you are not eligible to be allocated an affordable housing unit, you will have access to cheaper home loans from banks and Saccos through funding from the government’s Kenya Mortgage Refinance Company (KMRC).

You can also get your contributions after five years and use them for other housing-related activities, such as a deposit (down payment) for a mortgage, mortgage repayment or to improve your house.

 If you don’t claim your savings for housing-related activities, you can get them back after 15 years or upon attainment of retirement age. So say you earn Sh100,000 a month and you pay Sh1,500 a month (1.5%) for the Housing Fund, in five years you will have contributed Sh90,000 and in 15 years you will have contributed Sh270,000 (if your income doesn’t change).

If you contribute Sh2,500 a month, in five years you will have contributed Sh150,000, and in 15 years you will have contributed Sh450,000.

Tax relief

Those registered on the affordable housing portal are eligible for tax credit/relief equivalent to the amount contributed or the lower tax payable, up to a maximum of Sh9,000 per month. Self-employed Kenyans who are registered on the portal will also get tax relief, and both mandatory and voluntary contributions will get tax relief. For the employed, the deductions and tax relief will be handled at payroll. For the self-employed, you will get your tax credit when filing your taxes. First-time home owners/buyers will not pay stamp duty.

Who is building the houses?

The houses will be built by private developers, who will then sell them to the government, which will then offer the houses to Kenyans registered on the affordable housing portal. The government will provide land for building the houses, including in the counties, build access roads and the transport network, and set up infrastructure (electricity and water and sewerage). The housing portal will help in automated identification of the buyers.

Upcoming projects will be announced on the housing portal, in the newspapers, on radio and in Huduma Centre.

Rural areas

The government will support homeowners in rural areas to improve the homes they live in or to build new ones using locally-available quality building materials such as stabilised soil blocks. Already, 92 Appropriate Building Technology (ABT) centres have been constructed across the country, with a plan to have one in every constituency, then one in every ward across Kenya. Staff at these centres will offer technical assistance and equipment to members of the public to improve the quality of their houses. There will be Matofali machines, which are used for the manufacture of stabilised soil blocks, for hire. TVET colleges will also train members of the public on how to use cost-effective and environmentally-sustainable building technologies and how to modernise construction practices while preserving cultural values. Kenyans living in rural areas can apply for funding from the Housing Fund at 7% interest rate.

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Can I get a house if I don’t have a regular income?

Yes, but you have to prove that you are able to make regular monthly loan payments.

What if I am unable to pay the monthly payments?

The payment terms are designed to be affordable and flexible, geared towards helping you secure your home. However, every case will be looked at on a case by case basis. The government will engage insurance companies to develop home insurance products to cover home owners/buyers against losing their home if they lose their income/job. The cover will pay all or part of the monthly mortgage payment for a limited time, if a person loses their job involuntarily or if they lose income due business disruption, disability, hospitalisation, death.

Can I sell my house?

You will have to wait for eight years before you are allowed to sell the house. If you want to sell it before eight years have lapsed, you can only sell it back to the Housing Fund and retain the equity build-up i.e. the amount of your home you actually own, based on the amount of money you have already paid for it.

What happens if I die?

The house can be transferred to your next of kin.

For more information log on to:

 http://bomayangu.go.ke

http://www.housingandurban.go.ke/wp-content/uploads/2018/11/Development-Framework-Guidelines-Release-Version.pdf

What you need to know about WhatsApp import groups

By MJC

If you have been on Facebook for a while, you may have noticed an influx of WhatsApp import groups. These groups are formed to get many people together to import few pieces of merchandise each collectively, so as to attain minimum order quantity (MOQ). Coming together to import goods in this manner has helped a lot of people who are starting out with little capital, and who can’t meet the MOQ by themselves.

However, having been a member of many such groups, there are a few negative aspects I have noted as explained below: 

1. The buying price and/or shipping charges might be slightly or grossly inflated. The founders/admins of these groups are more often than not, doing it to make money. This is not necessarily a bad thing, but most act like they are doing it from the goodness of their heart, when in fact they are there to make money out of it. They make money by slightly or grossly inflating the buying price as well as the shipping charges. Not forgetting pesa ya kutoa that you will add as you send the money via Mpesa.

2. Quality is not guaranteed. Most of the admins of these groups do not first get samples of the items to check quality. So sometimes you will get very poor quality items and you the member, will just have to take the loss –  a huge one if you dared make a large order.

3. There might be no compensation for items lost before they get to you. If an item is lost whether at the point of being packed by the supplier, in transit or at arrival shauri yako! There may be no compensation for you. And if compensated it either takes a long time to get the compensation or you are compensated with something totally different from what you wanted.

4. Dishonesty. Like I said most people who come up with these groups (the admins) are there to make money, which they won't tell you. The intense kind of work that's needed when putting together these group orders simply cannot be done for free. You will pay for it in one way or another. Some will combine different shipments and charge the group for the whole shipment yet the group’s merchandise was only a part of the shipment. Some will use the money you pay them for something else and then pay for your items much later. This means your items will arrive months late because the money for your items was diverted to other things. Which is not so bad if you are buying for personal consumption, but detrimental if you are buying for business because by the time you get your items, the market will likely be saturated with the “unique” item that your WhatsApp group ordered.

5. Poor customer service. In some groups you will be treated very poorly. If you question anything you feel is off you will be berated, sometimes even insulted. Some admins don't even answer your questions within the group or if you contact them directly.

6. Con men. There are a few con men and women who have managed to swindle people out of their money using these import groups. I have seen it in two groups.

7. Undisclosed storage fees. Some of the admins  of the import groups don't have shops in town (Nairobi CBD) which means they have to store items in other people's shops who then charge you daily storage fees. The longer you take to pick your items, the higher the storage fee you pay. So, if you take several days to pick your consignment you may end up having paid retail prices for the items after including storage fees in the mark-up, which means you can’t sell your items at a competitive price. Often you are given a day or two to pick your items before storage charges start to apply, but in some cases, the charges apply from the first day.

8. Herd mentality that makes you buy worthless or hard-to-sell products. It's normal human behaviour to gravitate towards things that seem to be popular. But take your time to actually research about that popular product, check if there is a market for it before you order several pieces that you will be stuck with.

 I did encounter a group where the admin was very honest, was kind enough to teach us the process of importing for ourselves, did not inflate prices, made sure everyone got their order,  so there is still hope you may yet find a group that's a good fit. (Unfortunately she quit group orders after a couple of times. I told you the work involved is too intense to be free).

In conclusion, WhatsApp import groups can be of great help, but you have to go in with your eyes wide open. Be ready for all the things I've listed.

• Demand for accountability and better customer care because contrary to what the admins of these groups want you to believe, it is a business and you are their customer.
• Research and know the wholesale prices for the items you want. This is easy especially if you are importing from China. Go to Alibaba and contact a few suppliers and they will give you quotations that you can use to compare with what your WhatsApp import group admin is offering.

Father’s Day: Financial tips for dads

On the third Sunday of June every year, the world stands to applaud the important role that fathers play in their children’s lives. Fatherhood comes with joys, smiles, stern warnings and discipline as well as responsibilities in form of a child who will determine a man’s financial choices, beyond himself, as long as both the child and the dad have breath.

Here are some ten tips to help you navigate those daddy financial decisions:

  Be a good money model for your children: Home is the place where children learn about money, form attitudes about it and learn how to manage it, all from observing their parents. Most of us don’t get taught about money in school, yet we inadvertently become our children’s first teachers as far as far as money is concerned. Money management is a very important life skill, because we deal with money every single day of our lives, so as we teach our children how to navigate life, we should not forget to equip them with the right money management skills. If you want to empower your children financially, start by empowering yourself with the right knowledge that you can then pass on to your children. You can learn this from the internet, YouTube, taking classes, etc. Don’t let your children fumble in the dark and take that fumbling into adulthood, start teaching them the right things about money as early as possible to give them a head start.

It is not just about you:Men love themselves above everything and everyone else. For this reason, they prioritise their financial needs and wants over everybody else’s. That is a good thing – we ought to love and take care of ourselves first before we can do the same to others, even our loved ones. But at the same time, there needs to be a balance. As you take care of yourself, remember that you have a family. Today, we are focusing on fatherhood, so remember you have children and they have needs. As you allocate money to your needs and wants, don’t forget to do the same for your children, who rely on you for sustenance.

Your children are your responsibility, take care of them:  When the children come, whether you are married to their mother or not, you do not need a court to remind you that you have children you’re your DNA and your blood flowing down their veins and that these children have needs and that those needs require money to take care of. Whether you feel you as if you don’t have enough money to take care of your children, you don’t have the luxury to decide whether or not to take care of your children. Once the children have come into this earth, and as long as both you and they have breath, you need to constantly ask yourself, have my children eaten? Have they gone to school? Are they wearing clothes? Do they have a roof over their heads? Am I doing my part and my best to provide for my children regardless of my relationship with their mother? You should. 

Plan ahead; have financial goals – short-term, medium term and long-term – not just for yourself, but for your children too. What financial needs will your children have at every stage of their lives? Start planning for these costs and saving and investing for both major and minor inevitable financial goals, so that you will be able to take financial responsibility once the bills come due. Do not leave it until the last minute, where you might struggle with the temptation to let the children’s mother “handle it”. 

Your presence is more important than presents: You cannot buy your children’s love. Your children may not remember what you bought them, but they will remember how you made them feel. So, create warm memories with your children – sometimes this involves spending money, for instance taking them on vacation, but sometimes the most memorable moments have nothing to do with expensive toys, lunches or trips to amusement parks. Playing and running around with them, reading them a book or doodling with them might be the best thing you can do for them, that money can’t buy. Let your children know that money and things, though they may make some things in life easier, are not a prerequisite for happiness. 

Make sure you have health insurance for yourself and the kids. At the very least get your family on NHIF which now covers both in- and out-patient care. Medical bills can drain your finances, making it difficult to save and achieve other important financial goals. 

 Build an emergency fund with three to six months’ worth of living expenses saved up to cover you in case of an emergency that threatens to wipe out your resources, and undermines your ability to take care of yourself, your family and your children.

You might want to get life insurance which would help cater for your dependents’ needs if you died or got disabled before they are old enough to take care of themselves. Or at least have a contingency plan in the event that you were no longer able or available to take care of your children. If your death or incapacitation would throw your children into destitution, find ways to to mitigate this “worst-case-scenario.”

 Plan for retirement. Your children are not a guaranteed retirement plan, so don’t act as if they are. Have your own plan for financial survival once you get too old to actively earn a living; you need to be able to survive in the event that your children and everyone else abandons you. If your children choose to support you financially during your twilight years, it will be a bonus.

Remember you are not the Red Cross. Other people may have plans for your money, but put your needs and those of your family first. Don’t become the sacrificial lamb who takes on financial burdens of people who refuse to become financially responsible. Do not sacrifice your family at the altar of misplaced generosity.

Happy Father's Day!

 This post is brought to you by #SaveWithMshwari for the #52WeekChallenge

Join the 52-week Savings Challenge Kenya and network with people who are saving to reach their financial goals

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Money mistakes beginners make in business and in life

photo | pexels.com

By Steve Umeme

Financial discipline is fundamental for any individual and business, yet it can be as challenging as it is rewarding. Read these money mistakes that rookies make that we should all avoid.

#Money Mistake 1:
Never borrow money that accrues interest to start a business (except if you are paying for it through your salary); only borrow to grow your business. This is because business takes a long time to gain ground and begin making profit, yet most loans repayments have to be made within a month of taking the loan or even earlier. Therefore, never borrow money to start a business expecting that the business will generate income to pay back the borrowed money plus the interest.

#Money Mistake 2:
Never spend money you haven't received. Don't even promise someone money based on a promise you have from someone else. If someone tells you: "Ezra, come to my office tomorrow at 9am and pick Sh30K"don't go out to buy items on credit based on this promise, with the hope that you will pay off your creditor when the promised money comes; it may not come as promised and this will leave you in problems with your creditors.

#Money Mistakes 3:
If you want to save, whenever you receive money, don’t start spending hoping that you’ll save what remains. Normally what remains is zero because as long as money to spend is available, the numerous things you can spend it on are also available. And things to spend on even incite their 'relatives' so that you spend even more than you had planned. When money to spend is not available, we naturally find a way of doing without it. That's why I've learnt to save with an INVESTMENT CLUB. Once I send money there I assume I no longer have it. Before you spend any money, put your savings aside then spend what is left after saving.

#Money Mistake 4:
When you get an opportunity to meet a very wealthy person, never ask for money. Ask for ideas on how to make money. They may even choose to give you money on their own after seeing that your ideas are great, but let getting money from them never be your objective.

#Money Mistake 5:
Keeping your seed instead of planting it. Many people stop at saving. It's very, very difficult to save and have all you need to maintain your lifestyle especially after retirement. When you save, your savings are seed; plant it. When you just keep the seed (saving money) some seeds begin to die (eaten by inflation and the like). That's why I recommend that you read about the different types of investment vehicles you can use to grow your savings. I am not necessarily talking about putting the money in a business, because you can easily lose money in  business. I am talking about putting it in an investment.

#Money Mistake 6:
Never lend someone money you are not willing to lose. By the time you lend someone money, be contented in your heart that should the person fail to pay, you will not die. You should not even lose that person's friendship if they fail to repay the money you lent them. If you feel the person might fail to pay you and this will not affect your relationship with them, then lend them money. If their failure to pay would make you hate this person’s entire clan, please advise the person to go to the bank.

#Money Mistake 7:
Never append your signature to guarantee someone on a financial matter if you are not willing or able to pay the money on their behalf. Do I have to explain that one? No, it's self-explanatory.

#Money Mistake 8:
Avoid keeping money you don't intend to use in the short-term within easy reach. For instance, don’t walk with Sh100K in your pocket when all you plan to do in a day costs Sh20K. Like I mentioned in Money Mistake 3, there are always expenses available to gobble any money that is within reach, so if you don't want to lose it, put it away in a safe place.

#Money Mistake 9:
Avoid keeping money in inappropriate places e.g. in socks, under the pillow, in a pit, in the sitting room, in the bra, in a travel bag that you will place somewhere in a bus ... impulse buying is a devil that will keep you busy!

#Money Mistake 10:
Spending money on an item that you can do without (at least for the time being). These days when I pick money from my pocket or wallet, before paying for something I ask myself: What would happen if I didn’t buy this? If I find I can live with the consequences of not having that thing, I smile and walk away.

#Money Mistake 11:
Paying an amount for something that's not the minimum you can get that same value for. In other words, if you are along Tom Mboya Street and you pay Sh5K for a shoe that you can get at Sh3K at Muthurwa, that's a money mistake except for those who have achieved financial freedom.

#Money Mistake 12:
Wanting to be the savior of the world by helping everyone in financial need. My sister, my brother,  you are not Jesus. If you find it so hard to say no to a financial demand, you may think you are practising generosity when in actual sense you are committing (financial) suicide. We are not learning to be miserable here; we are learning to live within the boundaries of reality.

#Money Mistake 13:
Consistently spending all you earn or more than you earn. It's like having a drum where you have an inlet that's smaller than the outlet. It will never get full. And should the inlet ever reduce significantly the drum will run dry. If you do it the other way round and the inlet is bigger, it will get full and even overflow. Hence, we have to always ensure we are widening the inlet while narrowing the outlet – all the time. Your side hustle comes in handy!

#Money Mistake 14:
Thinking about short-term only and forgetting about long-term or thinking about the long-term and forgetting about the short-term. For instance, Lydia was told that there's money in land. She saved money over a long period of time and bought 30 acres of land. Now she has the land but she is always broke. She is always complaining. She's disgruntled and she doesn't seem to see herself earning from the land in the near future. Now, let's ask ourselves: Having 30 acres of land and no money to feed your family or take a child to hospital, is that wealth or poverty? I think Lydia only looked at long-term needs and forgot that she has short-term needs that require money. What of those who find they are one paycheck away from salary? Are they thinking about the long-term needs?

Let’s take stock of our finances. How many mistakes are you guilty of? Do you now feel better-equipped to do better with these tips? Good luck, savers! Share this knowledge with your friends because it will not benefit you if you are selfish with it.

Steve Umeme, BBA, CPAK, CFIP, is a seasoned auditor, risk analyst and personal finance coach. He blogs at http://steveumeme.blogspot.co.ke/

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Don't let Easter festivities throw you into a financial fix

Happy Easter! 

 Today evening marks the beginning of a long weekend and there are all sorts of enticing activities lined up to celebrate the Easter holiday. Celebration is good, but you need to be conscious such that you don’t spend all your money in one weekend, leaving you with no money to pay the living expenses that come after Easter and forcing you to take a loan thereafter to survive. Use this checklist to ensure that the four-day Easter weekend doesn’t get you into a financial fix:

 1. Make sure your pending essential April expenses are handled.
How much money do you have left to cater for your living expenses in the remaining 17 days of April and up until you get your next pay-check? Do a mini budget of the cash in hand versus the pending April expenses such as:

·         Food and groceries electricity tokens

·         water, gas/charcoal/kerosene/cooking fuel

·         mobile phone airtime

·         internet bundles

·         TV subscription

·         fare/fuel, car maintenance

·         Lunch at work

·         child expenses/daycare

·         laundry/cleaning lady

·         allowance to parents/siblings/relatives/friends

·         birthday/wedding/baby shower/bridal shower/occasion gifts

·         Donations to the needy

·         Church offering and donations

·         Toiletries/cosmetics

·         Haircare and beauty for you and the kids

·         Clothes/shoes/accessories

·         Doctor’s appointment/medical bill

·         Movies/events/fun activities/entertainment

·         Due debts

·         Standing orders

·         Chama contribution

2. Do you really have money to go on holiday?

 If after taking your pending April expenses versus the cash in hand you have a surplus, then you can decide to treat yourself and your family for the holiday within a budget that takes into account the amount of money you have to play with.

3. What's the plan?

Think about what you want to do this long weekend. Do you want to travel to the village? Do you want to take your family out for lunch and entertainment? Do you want to go on a getaway to Naivasha or Mombasa? Do you want to go for nyama choma, drinks and dancing with your friends? Do you want to host guests at your home? Decide what you want to do, then go to the next step.

4. Make an Easter budget that fits the cash you can spare for fun.

Make an Easter budget based on what you want to do, then check if the money available to spend on Easter is sufficient to cater for your costs for your selected activity. For example, if you want to go to the village, your Easter budget might include car fuel or fare to and fro, shopping for your parents, some money to spend with family and friends at the local village pub, some money to buy beer for the village idlers who think you are very rich, some money for emergencies, etc. If your plan is to go drinking and dancing from Thursday evening to Sunday evening, you’ll need to budget for fare/fuel/taxi, drinks for yourself and other people if you plan on throwing rounds or buying random drinks for men and women you find in the club, water, snacks, etc. Once you break down your costs and do a total ask yourself if you can really afford your chosen Easter activity. If for example your plan is to go to the village and you only have Sh5, 000 to spend on Easter (from step 1) and your Easter budget comes to Sh30, 000, you either have to cut down or cut out some expenses or decide to choose a different activity that costs Sh5, 000 at most, instead of Sh30, 000 you really don't have.

5. Don't get it twisted!

Do not use money meant for essential bills to celebrate Easter. If there is no Easter money, then there is no Easter money. You will not die for not having money to splurge on Easter.

6. Keep yourself and your spending in check.

Write down every expense that you plan to incur this long weekend and allocate an amount of money next to each expense. Carry the list with you and use it to monitor your spending to ensure that you don't go over budget. Review that list every morning and in the evening to track your spending. Before you head out, have a clear itinerary of what you will do and how much it will cost and ensure that you carry money just for that. If you happen to go over budget, you will have to strike out some things to accommodate the ones that are more important. If you've set Sh20, 000 for Easter weekend expenses, do not go over that. Do not give yourself a blank cheque to spend money without restraint. You do not want to look back on Tuesday morning with regret over your poor spending choices for a momentary holiday.

7. Keep costs manageable if you are hosting guests at home.

 If you are hosting guests to a party at your house, do a hosting budget based on how much you can afford to spend on the holiday. You can also have a potluck, where instead of shouldering the entire hosting financial burden by yourself, you can ask the guests to come with a meal and drinks then form a buffet of all the meals and drinks the guests carry with them.

8. Do you need new stuff for Easter?

 If you are going on a getaway this long weekend avoid the temptation to buy new things just for the holiday. Do you really need a new swimming costume for this Easter weekend when you already have one in your wardrobe? Before you buy something new specifically for Easter, ask yourself, do I need it or am I just buying it for a four-day affair? Will I ever use it again? Can I even afford it right now?

9. Lead yourself not into temptation.

When you set aside money for the remaining 17 days of April e.g. fare money, food money, etc, put it in a different account and don't carry your ATM card as you head out to celebrate Easter to avoid the temptation to withdraw it and use it on long weekend expenses. You can carry some money for emergencies, but remember that it should only be used for emergencies, which are unexpected situations which must be dealt with immediately because they cannot be ignored. For my emergencies, I usually have a debit card with money in it. The card is not linked to a bank account. Think Nakumatt Global or Nation Hela. The good thing about this card is that you can transfer the money from the card to Mpesa if you need it for an emergency. The card is strictly labeled emergencies only (my label) so if I ever take it out, I ask myself, is what I am about to pay for with this card an emergency? If the answer is no, I put the card away. You can even give it to your sober and firm relative to keep for you with strict instructions that it can only be released to take care of emergencies.

10. You can have fun on a budget.

Remember to be conscious of your choices and your spending. Stick to your long weekend budget. You don’t need to take a loan to celebrate Easter and you don’t need loads of money to have fun. You can go to the market, make yourself or family a special meal, and then watch a feel-good movie together or take a photo at a studio or go to the local park and run and play around. 

Happy Easter!


This post is brought to you by #SaveWithMshwari for the #52WeekChallenge
 
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