Business: What it takes to change money habits
Waithaka Gatumia
I felt a strain in my back and realised it was because I was hunched over trying to read from my notebook in the fading light. I stood up to go switch on the light and that is when I noticed I was not alone.
At a corner in the back, I saw the top of someone’s head peeping over the desk dividers of our open-plan office.
Eric was meticulously inspecting every company transaction from the previous month. He dotted every “i” and crossed every “t” in our accounts and expected nothing less from his colleagues.
Like Eric, most of us are careful to include every detail when dealing with our employer’s money. I guess we do so because of the fear of losing a job or being arrested for fraud. In contrast, most people cannot account for 20 per cent to 40 per cent of their personal spending.
The only amounts that are clear in our budgets are the ones imposed on us by others such as rent and loan repayments. We lack accountability when it comes to our personal finance and it shows at the end of the month. Many of us do not save or invest.
There is hope though. Start by simply knowing where your money goes. Try this for a month. Write down every shilling you spend for 30 days; like it was your boss’s money.
Don’t judge yourself, simply write down where your money is going. If you are married, do this as a couple. Be thorough and account for everything; mobile money transfer charges, bank charges, boda-boda rides, sweets and treats; write everything down.
My wife and I did this soon after we got married and we found that we were spending more on take-out food than our rent. This may sound like a middle-class problem but we have seen this same issue across all income levels.
Centonomy worked with a mechanic who discovered he was spending 20 per cent of his income on buying lunch at work, unnecessary mobile money transfers costs and taking an extra boda-boda ride each week.
A top executive in our class did not know that he was spending more than Sh80,000 on drinks a month and yet he is not an alcoholic. As his income grew he moved to more expensive clubs and became an ATM for his friends.
We still eat out with my family but we budget for it. We have a plan that allows us to save and invest while we enjoy the life we work so hard to earn.
If you do not know where exactly your money goes, then you feel powerless to change the situation. Eckhart Tolle said, “Awareness is the greatest agent for change”.
Act as you care about your money by tracking spending and it will empower you to make better decisions. The writer is chief executive Centonomy Ltd Email: [email protected]
