Use money as an asset

What is the first thing you think about when you get money?

When Nathan Birungi took up a gig that paid him about $300(Shs1m) a month, he quickly drafted a list of things he would buy the minute he received the money.

One of them, a laptop. Based on his taste and specifications, it would cost him about two months payment from the gig to afford the laptop. But the gig was to last only four months.

This means that after buying only a laptop, Birungi would be left with about Shs2m to live by until the next gig.

Back to you: What is the first thing you think about when you get money? Do you think Birungi made the right decision? Well, I guess you can say it depends on whether the laptop would be instrumental in getting him his next gig or help him accomplish his future gig.

It is not bad to spend,because it is through spending that the economy thrives. The question is what are you spending? If you are spending your salary, earned from a 9a.m to 5p.m job, or a gig that you did, you might be blundering.

Multiply money do not spend it

Mr Joseph Lutwama, director of programmes, Financial Sector Deepening Uganda (FSDU), says you should look at money as an asset and not a tool for meeting your needs. 

He says the majority of Ugandans look at money as a means to meet their needs as opposed to visualising its ability to multiply.

“When I have Shs10,000, I do not look at it as $1m, I look at it thinking how is this going to pay my electricity, school fees and the like. In other countries, it is different. Their mindset and goals revolve around how to transform this into $1m,” Lutwama says. 

The multiplier mindset creates the need for a financial advisor who can grow the money into much more. Invest your money, multiply it such that it is the returns that you spend and not your principal amount.

The challenge with spending money solely to meet your needs is that needs are endless. Tomorrow, you will need to work more and more to earn more money to meet your needs. It is a vicious cycle.

Research by FSDU found that 55 per cent of Ugandans are not able to come up with emergency funds when needed and both men and women among the poorest Ugandans tend to work more when running out of money.

Lutwama says the majority of Ugandans are subsistence and not commercial people, they are job seekers and not job creators. 

“Even the learned guys, they study so that they can be employed to earn money to build a house, educate children and relax. We are not in the business of making money. If I have my car and house and the salary can pay for my needs, I do not need to hustle,” he notes. 

“Until you start transforming those plots of land, and looking at your salary and savings as an asset, and not as money that you are going to buy things to enjoy yourself, we shall not grow,” he urges.

Juxtaposing it with overseas, Lutwama says at a tender age, children in the United States of America are thinking of ideas that will take the world by storm, which is why an idea can attract funding from major investors.  The financial industry has realised that to deepen financial inclusion and run profitable businesses, Ugandans need to change their mindset. 

Mindset change

Uganda Institute of Baking and Financial Services(UIBFS) with its partners across the financial sector launched the Banking  and Financial  services  Awareness  Month recently, looking at instilling a mindset change in the public across the country. 

Some of the tenets in the campaign are under the slogans “Your money can” and “be money smart”.

Ms Goretti Masede, chief executive officer, UIBFS, says an important aspect of using your money as an asset is saving. The excuse of earning very little money that cannot allow you to save does not count.

“Even if it is Shs1,000, in some places chapatis are Shs500, it is possible to eat two chapatis but there is a possibility of eating one, going to work and selling the other at Shs1,000,” she says. 

It all starts with changing your mindset.