Finding financial lessons in a reunion

After 11 months since the last reunion, all cars led our masked faces to Mbalwa, a village in Wakiso district. The lockdown and the threat of the Covid-19 virus made it impossible to have our monthly sleepovers also dubbed “Akatwalo”.

But in 2021, 17 of us decided not only had we missed each other enough, we’d missed our great talks. In between the group games, the pork chops, the music, the movies, the relationship advice and the prayer moments, we intentionally found time to talk about where we are at in starting and running our businesses, gigs for some people.

“Let’s talk about our finances, we always discuss this,” Sheila Akatukunda, a friend, calls everyone to order. “This is very important,” Brian Karugaba, the host, exclaims.

The day’s coach, Sheila Akatukunda, an environmentalist and director Sheila’s Kitchenette, suggests reflecting on our age and sources of income is a great place to start the talk on purposefully planning for our financial freedom.

“That, you have to answer because it is very important for the next stage. Are you financially independent? We all make our own money. But, are you financially free?” she asks before introducing the Game of Money.

Our adult lives are marked by quarters, from the age of 25 to 35, 36 to 45, 46 to 55, 56 to 65 and those ought to be our most productive years.

“For the first ten years of working where most of us are now and for the quarters that follow, think about what assets you have. There is overtime between 65 years and 70, in case you go through all these younger years with nothing, you can still make it. After 70, it is time out. In this game of money, when you sit back, you must look at what you have and what income it is bringing in,” Akatukunda says.

Not many youthful people take time to analyse their personal balance sheets or even income statements. We get by working the 8am to 5pm schedule, receiving a salary on the 30th day of the month and without a care for a budget and study of the monthly expenses that sometimes surpass monthly earnings.

The next point of emphasis is the cashflow quadrant and it is the reason we now know why the rich are getting richer.

“Poor people cannot imagine leaving their jobs. They earn when they work, invest for capital gains, are short-term oriented while rich people are long-term oriented, risk conscious and if it goes well, they have a lifetime of business. Their money works for them, they earn without working because they have set up businesses with structures so even when not present physically, they are earning,” Akatukunda explains.

While many of us long to be in the “rich people category”, it is less likely it will come to pass given the irrational decisions we make with our money. There is money for everything else but savings and investments.

“Money comes in at 100 per cent but goes to: others. You pay taxes, buy food, pay the doctor, buy clothes, electricity, water, newspapers, fuel, airtime, pay the gatekeeper, housemaid, landlord, contribute to friends’ weddings, send money to parents and relatives and pay loans. You pay every other person but do not pay anything to yourself,” Akatukunda says.

This is the core cause of financial struggles but there is plenty that we can do to be in charge of our money. Start with the basic steps. She suggests that when our income comes in at 100 per cent, give only 70 per cent to -others- pay the 30 per cent to yourself. But this is the order, 30 per cent first to you, 70 per cent to others later.

 She says, “We talked about paying yourself and if 30 per cent of your income is Shs300,000, you must pay 10 per cent as tithe, put 50 per cent in your investment fund, put 30 per cent in the cash reserve and 10 per cent for your fun account.”

 “This is supposed to solve your financial problems so if you are earning Shs1m, what are you doing being comfortable with it? You are supposed to go out there and look for more money,” Akatukunda says.

This method is meant to help us create surplus income. The money in the investment fund must not be removed unless we are ready to invest it. The cash reserve is not to be spent unless we have an emergency or unusual crisis. It is a bridge between good and bad times, for example what happened with the pandemic and sudden job losses.

At this point, some question how one can work so hard during the month and spend so little to grab a beer or go on vacation with friends. The lesson is to be frugal while we do all this saving. Some people argue the money they make is not enough to cater to others but that means you must go out there and find ways of making more money.

“You must earn lots of money if you are to follow this path,” Bruce Buryo interjects before a debate on whether it is practical to pay yourself and cater to your bills in this Kampala where the average salary of a working youth is Shs800,000.

Then there is the idea of financial freedom. The concept, which many of us blurt out have already attained, only to find out is confused with financial independence. It will now be on our minds as we work.

 “You are financially free if your current income exceeds your expenses and you can spend the rest of your life without working,” Akatukunda says. 

“No one is free then, apart from the big investors,” Karugaba interjects.

“You can only achieve financial freedom if you invest for cash flow instead of capital gains. Set up your business to operate whether you are there or not. Once systems are built, expand that business. Lastly, build your financial army,” Akatukunda says, “Access your investment fund, whatever money is there is like a soldier. When you get a new idea, do comprehensive research to understand it. When you take out your soldiers-the money, they should not die in battle. That money should multiply and once you recover your initial investment and earn profits, start paying yourself that 30 per cent.”

Weeks later, one friend believes nothing is better for youthful people than combining a social event with a bit of knowledge.

“It is those things you ponder about. The purpose of Akatwalo is to catch-up. When the financial talk comes through, you pick a whole big lesson much as it comes in a fun way,” Buryo says.

Income vs. expenditure

How to apportion your income

Net income: Shs1m

Of this, 70% (Shs700,000) goes to your expenses while 30% is savings.

A breakdown of savings worth Shs300,000

Tithe: 10%

Investment Fund: 50%

Cash reserve: 30%

Fun: 10%