Converting Cash Flow To Wealth
AzimaWellness Talks 24/2017
Converting Cash Flow To Wealth
How to create Residual Income
In our continuing series on creating wealth , last week we learnt wealth is a mindset. You can only create wealth if you align your thinking to wealth.
Most of us remain poor because all we entertain are thoughts of being poor. You attract what you think most of your time. And it is not our mistake. It is how we were programmed. Most of us were not lucky to be brought up with a silver spoon. Scarcity was the order of the day. Any mention of money was frowned upon by parents. At least this was my reality. My father worked for East African Railways that later became Kenya Railways. Railways was known to be among the poorest in staff remuneration.
My father did not entertain talks that suggested some money needed to change hands from him to us. I now understand him better. I have been earning my own money over 30 years now and I can confirm relating with money is the most difficult assignment to master. More difficult than a wife/husband relationship. At least with my wife I know several things I can do to win her favour. Not so with money.
Because money is central in our life, it is prudent we learn how to relate well with it. We learnt in our last article that money is a faithful servant. If you deploy it to work for you in the right places, it will not disappoint.
What are the available options to make money work for you?
Most of us use money as a medium of exchange only. We mostly earn by exchange of goods and services for money. More than 90% Kenyans earn money as salary or wages. Most workers earn their money far from home base. We therefore have overheads to pay like house rent, bus fare or travelling expenses to and from work. Pay for upkeep like food , clothes and other bills to pay like water and electricity. These are the first traps of money set up by those money smart to harvest from our income.
After meeting the essentials , we have been programmed to crave for certain luxuries. All designed to take away money from us. These are Items that are good to have but we must not have them at this stage. These include such conveniences like a smart phone that cost you in data bundles or Wi-Fi, pay TVs that cost you to watch like Multichoice. At a higher level this include a car that we do not make good use of but pay sh 300 to park in the sun all day.
We are programmed to spend to look good. We spend money in saloons, buying clothes in fashion and shoes to match the bag especially for ladies. We are more sensitive about what people think about us and pay any amount to prove we leas a sophisticated life.
All these activities take money away from us. To cope with Johannes, we end up spending more than what we earn. We borrow to meet the shortfall at an added cost in interest. This is the start towards getting into debt trap. This lifestyle is dangerous. It ensures we are broke from January to December. When Christmas comes, we have saved no money for holiday . Because we need to join other people going home or Mombasa on holiday, we borrow to travel digging ourselves deeper in debt. Come January with school fees to pay, we borrow again from our Sacco to pay school fees.
The culture of borrowing is living tomorrow’s life today . The question is, what will you do when tomorrow comes?
For others we are misled to take a house on mortgage. It is painful to have a house that you work for 25 years to own. This is more than half of your entire working life. When paying the mortgage, you have no money left for any other project. You struggle financially throughout this period. By the time you finish paying the mortgage, that house you have been paying is old and the location no longer attractive to tenants let alone anyone wanting to own it. You the owner most probably would want to move to a better location. Many modern homes are coming up in better locations but you cannot move out.
In these days of retrenchment and company’s like Nakumatt, Uchumi, Kenya Airways and chase bank among others hitting turbulence, it’s dangerous to rely on salary as your only source of income to service a mortgage and other long term debts.
These are some of the money mistakes we make due to lack of financial knowledge.
There is a way out of this mess. We need to learn and apply delayed gratification.
There is a clear road map to a better lifestyle. We need to learn this formula and have the patience to allow wealth to grow. We will learn the practical steps in our next newsletter. Be sure to keep it here.
With profound regards,
Founder and CEO
Azima Wellness Consultants LTD
Conference Speaker & Corporate Trainer in Total Wellness.