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Lessons Learned from Finishing Campus

“The next time you live like this will be when you’ve made your first million,” the old tuk tuk driver transporting my belongings from college to my new home remarked.   “Out here, you don’t vandalize property because your tap is dry or there’s a power outage.” His tone carried a hint of sadistic sarcasm, regardless of how well-meaning his unrequested guidance was.   In the past few months, I’ve been having numerous meetings with Mr. Reality. Just two weeks ago, while attending a graduation party at a friend's place, the caretaker stormed in, furious, and served a notice that completely killed the party. Only recently, while shopping at a local supermarket, I found out that the price of Unga has skyrocketed to six times what it was when I started my college four years ago. These are just a few of the harsh realities that the seemingly comfortable life in college shelters you from. It's not amusing at all.   Reality is the most grotesque monster one can face, parti...
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HOW TO AVOID BEING A CAPTIVE OF HOPE WHEN IT COMES TO PERSONAL FINANCE.

 

In harsh economic times like these, we all run the risk of becoming captives of hope when it comes to personal finance. This is a situation where you keep hoping things will get better while in reality they keep getting worse. As a result, you delay taking tough financial decisions such as cutting spending or diversifying sources of income.

For example, let us say you are staying in house whose rent is say KShs 30,000 per month. If your income is just going down, it means that at some point you could be struggling to pay the rent. If you approach the issue from a point of hope you could dig into your savings or even borrow to maintain current lifestyle.

If things get worse and you don't recover your income levels, it means the economic crisis will find you in a weak financial position. You will start regretting that you should have acted earlier. If you approach your situation from a more realistic perspective, you can downgrade your lifestyle and build resilience to survive and outlast the tough times.

To avoid being a captive of hope, you need to assess your situation honestly and objectively. The current economic uncertainties in the country call everyone to sober judgement. The situation has been worsening from year to year. If this persists, we will reach a point where things start worsening from month to month.

Everyone needs to undertake stress tests on their personal finances. To do so, you should look at various scenarios and develop responses for each situation as it arises. For instance, what would you do if your income declines by say 30% or the cost of living rises by a similar rate while your income stagnates?

When we say these things people accuse us of pessimism. Risk management is not about pessimism. It is about boldly facing the realities of the times we are living through. You need the courage to continuously make adjustments.

 

 

 



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