Your attitude to money can make you rich or poor

Hezron Gakuya, a retired civil servant in Nyandarua County, likes to share his ‘heroic tale’ with anybody who cares to listen when he is in the right mood. This man pulled off a bizarre money antic in his youth and it has been the talk in his home area for decades.

Gakuya was awarded Sh100,000 in compensation by a court, painted a local town red and, when he wanted to go home, realised that the last matatu to his rural home had long gone. No problem. He stopped a 62-seater bus along the Nairobi-Nakuru highway and negotiated with the crew to take him home.

He offered them an irresistible deal of Sh600, a fortune then, and the crew ordered the passengers to alight for refreshments while they ‘checked’ the brakes of the bus.

So Gakuya and his mistress boarded and made a grand entry in his village. With the bus headlights blazing and horn blaring, Gakuyu set a first of sorts, displaying to the awed villagers what money can do!

Gakuya would later make more but lower-key trips to town and squander the court award.

“I rationalised that the money was not factored in my life in the first place and adopted a clearing and forwarding mentality towards it,” he says, “but now I see the immense opportunity of changing my life that I missed by squandering all that cash.”

There are many Gakuyas among us; from employees who abscond work every month end ostensibly to reduce their pay to a “manageable” amount, to the housewife who sees all savings in terms of the beauty products she can buy.

These are the people who have adopted the wrong attitude towards money. But at the end of the day, they repeatedly confirm the old saying that a fool and his or her money are soon parted.

Witness the many strange things that scores of Kenyans do with any irregularly acquired cash, like working out how many bottles of beer it can buy.

Others will haggle and get a bargain but end up spending the money so saved to buy unhealthy foods to eat.

They do not see the tidy sums that such little savings can amount to and help them solve major debts or even invest.

Indeed, the old farmers who take most of their tea and coffee bonuses to Mombasa and squander it only secure a date with fate. Others leave home temporarily to enjoy meals in star-rated hotels. And like Gakuya, they may also hire taxis to move around just to prove that they have ‘arrived’.

But Festus Kamau, a personal finance banker, says putting all of one’s extra income in flashy cars, furniture, clothes and electronic goods does not guarantee financial freedom.

“This behaviour could be a compensation for something that such people missed in their childhood,” he says. The behaviour is bound to breed a culture of non-saving and can impoverish a person.

Kamau says he has seen many mistakes that people routinely make with extra and sudden money.

“I had a client who despite getting a promotion at work could not pay his loans and I personally intervened to sort him out,” says Kamau.

According to Kamau, this person went for a car, on loan, and a mistress after the promotion, which came with an extra Sh10,000 pay.

“When we did the arithmetic together, my client and I realised that the new car and mistress came with extra and hidden costs that were derailing him from servicing his loans.

“But he would not give up on the new acquisitions, claiming that they announced his new job status. This is a costly way of proving a social point,” says Kamau.

He says some people often take unscheduled holidays when they win lotteries, court compensations or acquire unexpected incomes instead of investing such windfalls wisely.

He advises people to plan soberly for regular and irregular incomes if they want to gain financial freedom.

“The beauty about financial planning is that one can set it and forget about it,” he says. He gives the example of a fixed deposit account through which people can save and enjoy the fruits of their smart decisions down the road with minimum pain now.

“If you are employed and have a regular salary, you can deposit ten per cent of it into a savings account each month, even if you have to sign a standing order with your bank,” Kamau says.

He says that people soon adjust to the ‘loss’ of such money but they certainly live to enjoy the tidy balance it amounts to when they retire or come round to investing it.

Any addition of other irregular or discovered money, from haggling and other sources, to such an account can only quicken such a savings fund, he adds.

But sadly, many people regard such monies as manna from heaven and squander it without any thought of posterity.

Extra cash: Don’t spend it hastily

• Adopting a flashy lifestyle to demonstrate your new status is foolish.

• Do an honest soul search and plan for a future when your job and health will not be guaranteed.

• Dropping small change or coins in a jar can help you save money on an ongoing basis.

• You can realise great value of your sudden and irregular incomes by first taking a few days to plan what to do with it instead of rushing out to buy things on impulse.

Photo: pillartechnologies.kbo.co.ke