Get a better grasp on your finances

In recent months, the headlines on Ebola have reminded me of the mid 1980s and the entire 1990s when Uganda struggled with the HIV/AIDS scourge. I remember the fear that gripped us during those dark days and my heart goes out to the communities in West Africa that are battling the Ebola outbreak.

Back then, it was almost impossible to imagine that a combination of a medical breakthrough like the anti-retroviral drug therapy and behavioural change would break the back of the HIV/AIDS pandemic.

What keeps hope alive even as Ebola continues to rage on is the knowledge that apart from treating the infected people, successful containment of epidemics of any kind is directly dependent on providing the affected population with vital information about early identification, treatment and prevention of the disease, and the speed at which they make the necessary behavioural changes.

How knowledge affects people
It has been proven many times over that human beings change in proportion to their knowledge and that education is the most effective vehicle for change. Education is what has against all odds kept the human species alive. I know it is easier to change one’s ways when you are dealing with a life and death situation like Ebola or HIV and that the same sense of urgency may not apply to matters of personal finance and wealth creation.

That said, we shall never make any meaningful change in our spending habits and the way we conduct our financial matters if we do not arm ourselves with information. Just like we were perishing because we did not have enough information about highly infectious diseases like Small Pox, HIV/ AIDs and now Ebola, it is likely that we will continue to struggle financially until we address our knowledge gaps in the area of personal finance and wealth creation.

I cannot over-emphasise the value of educating oneself on any subject that is of importance to you. Since this column is on personal finance section, I strongly recommend that you read any material that you come across on this subject and on investment and wealth creation.

Fortunately, there is no shortage of good, sound, information on these topics, the accumulation of which will slowly but surely get you thinking about practical ways to change or enhance your net worth.

What started me on this journey was reading Robert Kiyosaki’s bestselling book “Rich Dad Poor Dad’. I can unequivocally say that after the Bible, this is the one book that has had the single biggest impact on my life.

Kiyosaki’s narrative about his upbringing and early working days spoke to my personal situation; my past (my family never spoke about money when I was growing up), my present (I had been working for seven years when I read the book and had nothing to show for the seven years) and my future (where I was headed if I did not do something about my spending habits and my lack of financial literacy).

Decisions out of financial illiteracy
One decision my husband and I made shortly after we got married was that (because “life is short”) we would go on holiday, out of the country once a year. Since we were financially illiterate, we had not given much thought to how we would finance this noble endeavour. Additionally, we never felt the need to plan our holiday expenditure because it was very easy to get a loan from the bank to cater for such unplanned “necessities”.

Needless to say these holidays were burning a big hole in our finances, even though we always comforted ourselves that we deserved them and it was money well-spent (we were investing in ourselves). The sad reality was that we always came back to those painful monthly loan repayments that never seemed to go away because we kept taking new loans or getting loan top-ups to finance this senseless vicious cycle.

As luck would have it, on one of these holidays I read “Rich Dad Poor Dad”. If you have read the book you will know that Kiyosaki speaks about how the middle class have a habit of taking out loans to finance expensive holiday plans, while convincing themselves and those around them that they deserve it. I was stunned by facts shared in this book and to this day read it at least twice a year to ensure I don’t go back to my old ways. I have been greatly influenced by this one writer and have gone on to read any book authored by him that I can lay my hands on.

Interestingly, I know of friends and colleagues who have read Rich Dad Poor Dad and while acknowledging that the message contained in this book is powerful, have not gone on to make any meaningful change to their lifestyle. I must quickly add that given our different backgrounds and life situations, we shall not be similarly impacted by what we read.

That said, I can guarantee you that once you keep on increasing your knowledge on the subject of finances, the day will come when you will find a compelling reason to start making tangible changes to your spending habits and in so doing, change your financial future.

Thomas Henry-Huxley put it perfectly when he said “Perhaps the most valuable result of all education is the ability to make yourself do the thing you have to do, when it ought to be done, whether you like it or not”.

Grace Makoko is Standard Chartered’s head of financial markets, East Africa.
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