This archive report was first published on 5 June 2020.
Creating wealth in Kenya may seem like a daunting task, but it's achievable with the right mindset and financial principles. According to personal finance coaches, there are four essential steps to take on your journey to wealth.
Percentage vs Amount: The Key to Accelerated Savings ¶
When saving money, it's crucial to focus on the percentage rather than the amount. This approach will help you accelerate your savings, regardless of increases in your earnings. As Eric Roberge, founder of Beyond Your Hammock, notes, 'You might be saving a big chunk of your salary, but all this will amount to nought if your saving percentage does not grow hand in hand with your income.'
For instance, if you're saving Sh. 5,000 out of Sh. 15,000 earnings every month, your savings should increase to Sh. 10,000 when your earnings grow to Sh. 20,000. If not, it may indicate lifestyle inflation, as Roberge explains.
Intentional Money Choices: Taking Responsibility for Your Finances ¶
The biggest hurdle to improving your financial position is making intentional money choices. As Waceke Nduati-Omanga, a personal finance coach and founder of Centonomy, emphasizes, 'The total sum of your current financial status is made up of decisions and choices that you have made, and until you take responsibility for it, nothing is going to change.'
Working with What You Have: Starting Early and Optimizing Cash Flow ¶
It's easy to put off creating wealth when your income is low, but you don't need a six-figure salary to grow your wealth. Start by understanding and optimizing your cash flow, finding the right balance between investing and paying off debt, and opening a separate savings account.
Mastering the Rules: Understanding Cash Flow and Financial Concepts ¶
Financial advisor Douglas Boneparth stresses the importance of mastering the rules of cash flow to get a handle on your personal or business finances. This includes having a firm grasp on financial concepts such as taxes, deductions, and remittances.
Being Financially Intentional: Reviewing Spending Habits and Financial Position ¶
Being financially intentional requires reviewing your spending habits and general financial position regularly. As Roberge advises, 'You can book a day in your calendar every month when you can review your finances by looking over all your spending, your accounts, and your net worth.'
