What you need to know about investing and prioritizing your money.

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A train of thought about the state of Africa hit my mind last week. This got me thinking of the living conditions in Nairobi. Especially the priorities of the young and upcoming generation. How could a newly (self)employed youngster think of buying a car yet he is paying rent and other countless bills to the government? Is this the right way of securing your future?

For instance, you buy a car for Ksh 500,000 on loan and you pay a monthly rent of Ksh30,000 plus bills of around Ksh7,000. Not forgetting you earn a monthly salary of 200,000. Also, you have daily expenditure on food, credit/ internet, and other miscellaneous things.

How will you manage to save and invest for a better future? It will take more than five years to reach your target in life. Car maintenance is very expensive. From regular fueling to upkeep charges and insurance covers. You got to ask yourself if your priorities are straight.

This trend is keeping Africa a step behind from full progress. Youths are prioritizing the wrong things in the name of comfort and luxury. With this modern living, many millennials are creating a dull future. I once heard the crazy tale of a young lady who bought a Ksh 25,000 smartphone with her Ksh30,000 salary. This kind of thinking is what limits thousands of youths from progressing to bigger things in life.

Last month I was out and about hunting for a house near the CBD of Nairobi. I saw wonderful and beautiful apartments and neighborhoods. However, the prices of those houses were outrageous! Just because the apartment is located in an area that is 12.6Km from the CBD, the landlords charge tooth and nail. Newly built houses close to the highway were not less than Ksh15,000. The most expensive apartments were in the range of Ksh26,000- Ksh40,000.

Because of these factors plaguing locations near the CBD, I was forced to adjust my search to areas far from Nairobi. Thankfully, I landed on a prized apartment that matched my standards for over half of what other landlords charged. What makes this experience of house-hunting valuable, is the lesson. If you want to progress, spend on the right things.

Why live in a one bedroom apartment that goes for Ksh30,000 then spend more than Ksh 10,000 in car maintenance? Or, why rent Ksh 18,000 apartment yet you can live in a more affordable home and gain the same advantage? This same disease plaguing our youngsters is affecting Kenya’s financial planning. Why should the government borrow more loan when the previous loans aren’t dealt with? In the long run, the government borrows to fund expensive projects which in turn end up in people’s pockets. This is wrong prioritization.

No wonder thousands of Kenyans carry a loan of some kind. Unless you are mortgaging or studying, loans should not be in your mind. With the right prioritization, you can save and invest in your future. An easy way to carefully prioritize your options is to consider the following:

  • Don’t buy a car if don’t own a house or land to build your home.
  • Don’t rent an expensive house if there are other cheaper options with the same advantages.
  • Don’t follow luxury and trends if you can’t comfortably afford it.
  • Know where and who you want to be in the future then prioritize your expenditure
  • Don’t compete with others. We all have our own strengths and limitations.
  • Always save, then invest for returns.

If you want to progress, be ready to sacrifice your comfort.

 

 

 

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