YWSE MAY DINNER: Personal Finance Management & KUWA

We finally managed to get Centonomy on board. And I have to say, the event last night, was simply amazing.

It was the first time we had a “male” presenting and he did a very good job. Stan took us through a brief introduction of Centonomy before getting right into things. Centonomy was born out of pain. Pain from a loss of income when one loses work, and  for not having achieved anything for one self while in employment. Because nobody teaches anyone about money, Centonomy was born with that idea and goal in mind, and today they have successful programmes that centre around Personal Finance Management, Career Success and Entrepreneurship. They teach not only how to Manage Money, but to Create more wealth.

“You cannot be the only Entrepreneur in your own Business”

What was the most important thing that we learnt in school?

1 + 1 = 2

If you were given 1 pound/dollar/shilling, what would you do with it? There are basically two types of people who exist:

  • Wealth Creators – turn the 1 pound/dollar/shilling into 2
  • Wealth Consumers – look for the quickest way to diminish the 1 pound/dollar/shilling (1-1=0)

It all comes down to the Choices that we make with our money. And it is never too late to make a different choice.

In today’s world, wealth LOOKS a certain way (Big house, Big Cars, Big Account Balances). But what really is the definition of Wealth?

Wealth is the ability to maintain the lifestyle you desire without necessarily having to work

That doesn’t mean not working at all. Work is something that you enjoy doing. Hence if you lost your source of income, would you be able to maintain your lifestyle choice? Also, is your choice a RESOURCE or a PRISON? (Big expensive cars Vs. Small low-maintenance ones).

When it comes to Wealth Creation, you either lead an Image Driven Lifestyle or a Wealth-Creation Driven Lifestyle. The Characteristic of each are:

Image Driven Lifestyle:

  • Spends more money as Income Increases
  • Saves less
  • Works to consume
  • Leads a life of extravagance
  • Is careless about time
  • Spending is driven through other people’s opinions

Wealth Creation Driven Lifestyle:

  • Invests more as income increases
  • Distinguishes self from work/business
  • Looks for ways to multiply income and save more
  • Works to create assets
  • Assets fund lifestyle
  • Lifestyle starts modest then grows
  • Values time
  • Spending is driven by personal choice

“If no one was around to see it, would you still buy it?”

As an ENTREPRENEUR, can you AFFORD YOUR LIFESTYLE?

People commonly conceive Entrepreneurs to be “living the dream” – Big Cars, Mansions, Vacations. A little known fact is, however, that Entrepreneurs sometimes, get by without any of the above.

It is important for Entrepreneurs to “LET GO” when they are in business, because you cannot be everything in the business. These leads us to differentiate between being SELF-EMPLOYED and being an ENTREPRENEUR

A Self-Employed person works IN his/her business. They cannot “Let Go” and most certainly cannot step away for  a short period of time, for fear that the company may collapse without them.

An Entrepreneur works ON the business. They can easily hand over the Management or administration chains to people who are well equipped to do the work, and can take some time off to enjoy his life (lifestyle choice)>

“Entrepreneurs should pay themselves too!”

However, any source of income, whether it comes from Entrepreneurship or in the form of a Salary is subject to deductions BEFORE you can actually invest/spend it. Here is how:

Assuming you ANNUAL salary for twelve months looks like this:

J        F        M        A        M        J        J        A       S       O       N       D

 

  • The first deduction made in your salary, is TAXATION (30% in Kenya). So your annual income would then look like:

J        F        M        A        M        J        J        A       S       O       N       D

 

  • Secondly, if we live in a RENTED property, we pay another 30% of our incomes towards rent. (If we live in owned properties, where does this part of our income go?). That leaves us with:

J        F        M        A        M        J        J        A       S       O       N       D

  • Next we have our BASIC NEEDS:  (Food and Utilities, School Fees). Another deduction, bringing us to:

J        F        M        A        M        J        J        A       S       O       N       D

  • Some of us rely heavily on TRANSPORT to commute to work. So we can say that a whole month’s salary goes into this.

J        F        M        A        M        J        J        A       S       O       N       D

  • If we have CHILDREN,  they have their own demands and expenses which need to be met. Another month, lets say.

J        F        M        A        M        J        J        A       S       O       N       D

  • That only leaves us with ONE month’s pay to Save or to Spend.

It becomes quite obvious then that you need to monitor and track where you spend your money in order to have enough money left over to save.

Identify the ASSETS from the FLOSSETS

(Assets put money in your pocket. Flossets take out money from your pocket.)

Also, as an Entrepreneur, you need to ask yourself: What Value are you adding to your Customer?

Imagine that your customer needs to enter a door with his/her hands full of packages. How can the customer pass through the door without using their hands? What Products/Services can you, the Entrepreneur come up with to prevent the door from closing, when there is a need for it to be held open?

Possible solutions include: Automatic Sensory Doors, Rotating Doors, Doorstops, Bio-metric Doors, 2-Way doors, Door Bells, etc

“What Problem is my Business Solving?”

Also, when you are an Entrepreneur, you always have yo think ahead. Always ask yourself, How do I do things differently from the competition? 

You always have to be involved in   PRODUCT INNOVATION and  BUSINESS MODEL INNOVATION and get serious about BRANDING (What is your Business ID, How does your brand make people feel, What is your COMPANY Brand, What is your PERSONAL brand?)

An example of the above would be the defunct Kenya Power and Lighting Company (which immediately generates a picture of darkness and candlelight due to poor administration and service and maintenance) and Safaricom’s MPESA (ease of operation, accessible, reliable).

“Know How you can KILL your OWN BUSINESS, and then work towards creating those environments”

So the take-away from the Centonomy Training were:

  • Start thinking differently
  • Safe first, then spend what is left after saving
  • Buy assets with your Savings that will generate more income

Recommended Reads: The Innovator’s Dilemma – Clayton Christensen

A Word on KUWA

KUWA (Swahili for to be) was founded by Zahra Kassam. It is a consultancy practice that aims to address urban planning issues in Kenya through the lens of participation and multi-disciplinary approaches, through a program developed to bridge the gap for students between theory and practice. As a social innovation fellow from the Amani Institute, Zahra is using her design thinking skills and business coaching techniques to help social entrepreneurs and innovators progress in their work.

Zahra spoke to us about how, coming from a family with Financial background, she had to  pursue her dream of architecture through a whole new channel. Her light-bulb moment for KUWA came when she was doing her field placement in Bangkok.

She came back home and started working on urban planning projects for the government on a pr0-bono basis, but with a “participatory” approach.

One of her projects included working on the  “Making Cites Together” movement which aims at developing  “a sustainable, viable and long-term agenda for Nairobi’s public spaces”.

She believes in defining oneself as Social Entrepreneur (getting the concept right) and who you are as a person. You also need to be able to sell you WHY, because at the end of the day, people aren’t interested in WHAT you do but WHY you do it.

A Ted Talk entitled “Theory of Change” by Clay Shirky also inspired her to put her best forward.

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