Learn How To Relate With Money

AzimaWellness Talks 26/2017

Learn How To Relate With Money;

 

Wealth accumulation and consolidation

In last week’s article, we explored one stage of wealth creation. The multiplication stage. This is where the journey to wealth begins. It is an important stage we must all go through to load the correct software for wealth. Even those who have made a great fortune for their children should ensure the children start by working for money after school. This will make them learn how to relate with wealth.

These are universal principles of wealth not applicable here at home only. The school system is designed to grow our IQ. This deals with cognitive ability. Human beings are made up of three key pillars. Our personality, IQ and EQ. Our school system is designed to develop our IQ only. We go through school to university without ever hearing about personality types and emotional intelligence. This was my reality. Those who go to village schools graduate before knowing their personality type let alone learning emotional intelligence.  We will discuss these differences in the coming articles.

This week we have just graduated more than 600,000 form fours. In an ideal economy, they will start earning own money now. In developed countries, students get out of their parents’ house at age 18 and learn to fend for themselves. This may not work in Kenya because there are no jobs to enable them pay for their upkeep. This is a great disservice to our youth. It denies them an important stage in their life.

The most critical stage of growth for men is between 18 – 26 years. For ladies it is 28 – 36 years. This is when we are at our most creative mentally. It is when we act as God’s co-creators.  All the transformative innovations and inventions have been made by people like us when in this age bracket. Bill Gates started developing Microsoft as a student in Harvard University. So did Mark Zuckerberg. They were around 18 years. They quit campus. Steve Jobs started Apple with Steve Wozniak at the age of 21 years. Travis Kalanick was 23 years when he started Uber. Even in earlier days, inventions were made at this same age bracket. Isaac Newton was 23 when he formulated the law of gravity.

It is a national shame that we do not have a plan for the 615,773 form four students who joined the job market this week. They are in the prime age of around 18 years when their creative juices are at their best. Our bigger problem is we do not have a conducive environment for their creativity to manifest. This is where they start wasting away. Our universities are not model institutions of creativity. Very little research goes on there. They are an extension of secondary schooling. Their fate is made worse by what awaits them after passing out of college. With 40% unemployment rate, the students loose hope for a better future. We are simply wasting away our most creative and innovative brains as things stand.

This problem has been made worse this week. Our president has opened our borders for East Africans who want to work in Kenya. They only require an identity card. Anyone from the larger African continent with 1.2 billion people will not require a visa to come to Kenya. They will get visa at the point of entry.  I wonder what is our president’s intentions. We have the highest rate of unemployment in this region.  I wonder how allowing people to come to Kenya to compete for the few jobs available will be of help. I will be keenly watching what advantages we will get from this wisdom.

We discussed in our article last week that we have to save as much as we can in our 20’s if we are to retire wealthy. This is the seed capital we invest to multiply in our 20s. Age 20 – 30 years is called the critical decade. This is when you lay your foundation to Wealth. It is unfortunate our current youth have little to save and invest due to lack of jobs to start earning. Most parents are either employees or subsistence farmers.  Very few have any form of business. Their children have nowhere to learn business skills. They idle around and get wasted. We need to come together to create avenues for them to get into useful engagement.

Stage 2 in wealth creation is called accumulation stage. In this stage, we reinvest and accumulate wealth in the sectors that give us good returns. We use the experience we’ve gained in wealth multiplication stage to know what works and how to start multiple streams of income. Failure rate is lower at this stage because we have gained experience. We also start investing in passive streams of income.

By this age we have a family. This calls for more serious planning unlike in 20s when you’re alone and can take higher risks and live on a low budget as you save. Unfortunately, a lot of people make a grave mistake at this stage when their businesses start making a good turnover. They relax and get an illusion that things will remain this way. They think they’ve “arrived!”
Temptations for instant gratification creep in. If you have not learnt to separate your own money from business money, you start eating into the business. You spend more than you’re making. This is self-sabotage.

All businesses have different seasons. There is high and low season. Strive to establish different streams of income at this stage. One sector can be disrupted by technology or the market goes burst. This has always happened. There is no single line is business that is not susceptible to market correction. If you settle with one business and it gets affected, you will be in big trouble.

Currently, we have perfect examples to learn from in our local market. The most vibrant business sector in Kenya as a net importer is the retail sector. The big players like Nakumatt and Uchumi have literally collapsed leaving very many suppliers hanging on a reef. If you started your business to supply to supermarkets and it goes the Nakumatt way without paying for your deliveries, you will be in big trouble. This explains why it is imperative to have alternative streams of income. You are not safe if you concentrate your investments in one sector.

Those who were in taxi business before Uber came in our market are struggling to survive. Those who did photographs processing services like Ramogi Studio had to close shop because we shifted to digital photography. Those who built their businesses to service typewriters had to close shop. Currently, banks and insurance companies that will not adjust to the current dynamics will go south. We need to be very innovative to survive the changing market dynamic.

The rule of the thumb is to invest in at least 5 different and unrelated sectors to spread your risks against disruptions. Do not rest until you have diversified in at least 5 sectors. Do not fear trying out. You will never know you can make it if you do not try.

We have a well-developed template that guides people how to spread enterprises across unrelated sectors . Before you start any business, be very clear on the WHY of your business. Then the WHAT and HOW. The how is what keep the business running. The how of the business can be replicated across other businesses but every business should have a unique Why and What.

We will continue his discussion in the next article.

With profound regards,
Maina Azimio
Founder and CEO
Azima Wellness Consultants LTD
Conference Speaker & Corporate Trainer in Total Wellness.

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