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Hyperventilating every time you see your bank balance isn't healthy

OPINION
By Judith Mwobobia | July 5th 2021
Save for emergencies and unforeseen events like sudden death and accidents or sickness, many expenses don’t come as a surprise. [Courtesy]

Just how deep do your pockets need to be to join the top one per cent of the wealthiest people in Kenya? Apparently, not very much. At least not as much as I expected the figure would be. According to the 2021 wealth report by Knight Frank, if you have assets and cash (minus debt/mortgages) worth Sh2.2 million (20,000 USD), then you, my friend, are doing extremely well, at least by Kenyan standards.

In South Africa, you would need over nine times that amount (Sh19.4m) and over two times more in Nigeria (about Sh7.5m) to join the top pack. I was horrified by the report. One, because it shows the high levels of poverty in the country as if we weren’t so poor, many people would have a net worth over that amount, and joining the wealthiest one per cent would be harder to achieve.

Two, you probably already know the Kenyan tycoons who fill the spot, and many other wealthy people who would fill up the top one per cent. So chances are many people around you right now, even while living a seemingly comfortable life, do not have a net worth of Sh2.2 million. A sad reality indeed.

After going through the report, for a few hours there I was ready to dispute it. Not with facts, but merely with nuggets from what I thought was an educated perspective gleaned from my observations. Sh2.2 milliion seems like so little money to join the top one per cent in Kenya, and on my walk home from work that evening, I definitely saw many vehicles on the road well worth more than that amount.

I also walked past billboards displaying houses for sale, well above Sh2.2 million. Heck, the cheapest apartments in the city go for at least Sh3 million. So how is it that many people are seemingly doing well yet studies reveal that the opposite is true?

Well, apparently we are very much like our government when it comes to borrowing. We have a dependent relationship with debt. If the NCBA report that Kenyans borrow Sh1.2 billion daily from Fuliza and Mshwari is anything to go by, then I can certainly believe that having a net worth of Sh2.2 million is a tall order.

While debt can be a useful tool one can use to grow when invested in a viable business or assets that grow the money, more times than not, it can be avoided. And it takes proper planning and discipline to pay it off.

Save for emergencies and unforeseen events like sudden death and accidents or sickness, many expenses don’t come as a surprise.  

For example, you know that you have rent to pay every end of the month, school fees at the start of the term, and for most households, food costs can be estimated. These are expenses you plan for early enough by budgeting your income. And as the financial experts like to say, if your expenses every month exceed your salary and do not give you any room to save or invest, then you are living way above your means. Perhaps you need to consider selling that fuel guzzler and going for a more economical ride. You could also move from that neighbourhood and scour surrounding areas for cheaper rent prices.

Additionally, if your children’s school fee invoice leaves you foaming in the mouth from its exorbitance, it is high time you moved them to a cheaper school. And again, a cheaper school does not always translate to poorer education. Sit down with Jayden regularly and do some arithmetic to ensure the little chap is on course. Then do what you have to do; and there is no shame in that.

Also, the middle-class lifestyle has caught up with us, and even that term is different for Kenya than what is classified as such globally. For Kenya, the middle-class category is defined as those earning an average of between Sh23,671 and Sh119,999.

While trying to meet society’s expectation of how you should be living, you may find yourself in a vicious cycle of borrowing heavily. Live simply, and live a good life.  

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