‘You can never be a millionaire working for someone.” This cliché carries wisdom behind it that most working class citizens resonate with. This is a class of hardworking and mostly well-educated people earning middle-income. A majority are city dwellers with urbane longings and fast-life aspirations. Unfortunately, many people with well-paying jobs feel like they are losing money.
Wealth coach Steve Down confesses that he’s encountered many young men and women, usually aged between 25 and 35 years, who have zero balance in their bank accounts after more than five years’ employment in lucrative positions.
These are not isolated incidents identified among outlier spendthrifts. A majority of the employed suffer a similar fate. Steve Down identified 3 primary causes that underlie every form of financial ineptitude that makes the working population feel like they’re losing money:
1. Absence of deliberate long-term thinking in goal setting, financial planning, and spending habits.
2. Expensive spending habits especially on basic needs such as education, shelter, food, and entertainment, coupled with high dependence on the unemployed.
3. Minimal investment in financial security and gaining assets such as bonds, stocks, and real estate. Instead, resources are wasted on purchases that depreciate such as cars, electronics, and fashion accessories together with the ostentatious display of apparent affluence such as weddings, holidays and parties.
The above factors often blend and when encouraged by easily accessible lending services from banks, a cycle of borrowing to spend soon emerges.
This happens when, after a young couple for instance has spent their combined salary on a lifestyle they can ill afford, are forced to seek a salary advance from their local banks.
They borrow to sustain a lifestyle of consumption without saving or investing. Their children often attend expensive private schools while they reside in exclusive neighbourhoods that charge a premium for rent. Many are servicing a loan they took to fund a recent lavish holiday at the coast and still have to maintain and service a fuel-guzzling SUV.
A young person in similar circumstances makes a vow to manage his finances, but he never gets around to sorting his debts and cutting down his expenses.
So the cycle of borrowing and indebtedness persists.
If God forbid, a misfortune such as sudden illness or company layoffs befalls this couple or the young person, they are surely a week or two away from destitution.
One aspect that could mitigate the financial catastrophe in waiting is an immediate injunction on spending, a deliberate plan to pay debts, and a drastic restructuring of their lifestyles.
Sadly though, without sound financial literacy, this is unlikely to occur. A whole generation of productive men and women face a potential financial disaster if urgent and crosscutting measures are not taken.
At Financially Fit, we believe that good money management is part and parcel of a wealth mindset. By practising the principles of wealth, you begin to control your spending and grow your income.
To avoid feeling like you’re losing money even when you have a job that pays well, you need to look inward. Decide how you want your finances to be and set goals to achieve this. Always think long-term and track how you spend your money monthly. Drawing a plan to pay off all your debts will also help you get out of debt that takes away your income.
Riverside Drive, Nairobi – Kenya.
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