70% Ugandans survive on borrowing - FSD Uganda Study

Photo by Towfiqu barbhuiya on Unsplash

By Arthur Moses Opio

We all read that statement that was screaming on the Daily Monitor news paper on 15 April, 2024. The report is based on a study by FSD Uganda and it said, "Seven out of every 10 Ugandans were operating a personal budget deficit(needing more money to than they are earning to cover their personal budget" Now, 70% is huge. What are the 30% doing that the 70% aren’t doing? The report continued to say, "More Ugandans are relying on their family and friends, personal savings, and borrowing to manage their budget deficits than was the case in 2018."

What’s notable in this, is that Ugandan’s have personal savings and compared to 2018, 60% of Ugandans are now saving which is a good thing. In their 2017 SDG report, Afro Barometer said, "Ugandan’s saving rate was at 12% compared to Kenya(23%), Rwanda (18%) and Tanzania (13%)" Generally we have been doing badly. I need to find out what our stand is currently but an improvement of 60% should be applauded. 

But saving is not enough, it is the first step. Even if savings is up. Finscope report says, "Most Ugandans are not managing their budgets well." and failure to manage picks into things like extensive borrowing to meet a budgeting deficit as stated above. If you are lucky to have personal savings that is good, then the only worry is that you are probably eating into your wealth building tool. Savings should be categorised, emergency savings and investment savings. 

You can make and save money, but if you are having more months than money, the problem is not the income. It's your money management. We have to develop high income skills levels to enable us manage this money resource well. 

Paul Busharizi once wrote an article titled, "Perpetuating the poverty among the elite" and said, "There is the Urban legend of the manager who cannot make his salary stretch to the end of the month, while his driver who earns a fraction of his salary, not only gets to the end of the month, but has enough left over to invest in his growing empire of mizigo rentals." He further said, "The difference between the two men is that the boss is focused on consumption lifestyle while the driver is focused on investing. And that is the crux of the matter. There are only two ways to spend your money, you either “eat” it or invest it."

There is no doubt economic times are hard but we have to be smarter. Money management is a skill that we all must harness. Even if we are doing fairly well, we must keep learning to avoid slipping back. So manage whatever little  money you have well. It's a much needed skill. We are all victims of poor financial management but we can be better.

So these are some of the things the 30% are doing:

1. They have financial goals.
2. They have a financial plan.
3. They have a budget.
4. They track their expenses
5. They live below and within their means
6. They are investing in appreciating assets like Bonds, Treasury Bills, Fixed Deposits, Unit Trusts that offer at least 10%. They know there is a limit to how much they can cut their expenses, so they focus on increasing their means.
7. They are involved in producing goods and services. If they aren’t directly producing, they own shares of companies that are producing goods and services.

So once again, I remind us, let us build that emergency fund. UGX 1,000,000 is a good target to begin with. In case of a challenge, you will have that as your first rescue point. It is your fire extinguisher, you need it badly, I badly need it. 

Don’t ignore the power of putting 10,000 UGX aside, if you do it for 7 days, that’s already 70,000 in your emergency pot. XENO CIS allows you to save as low as 10,000 UGX, you can dial *165*5*7# my referral code is XENO84105. 

For more information about XENO click this link.

“I want it now!” How The seductive Power of Now Robs Our Finances

Photo by iStrfry , Marcus on Unsplash

By Arthur Moses Opio

In my last article, Don’t talk about money and do nothing about it, I mentioned something at the tail end of the message,

“Somehow we have prayed for so long to break the backbone of poverty, but it continues to loom around us, why? We are not productive, our money is not employed.”

Dear reader, money doesn’t come out of thin air, it doesn’t come because we are good or even knowledgeable. It comes down to two major things we must produce goods and services. 

In one of his tweets, Reno Omokri said, “Go to parties in the poorest parts of almost any country, and you will see people dressed in expensive clothes, wearing jewelry, and snapping photos with iPhones, Though not always the case, people choose poverty by spending foolishly instead of investing wisely”

Someone will say, but I can’t invest, I don’t earn a lot of money, I can’t even save. This comes down to one’s money philosophy. There are three toxic money beliefs Ramit Sethi talks about, one of them is not talking about money, the second is not questioning your financial upbringing and the third is investing is only for rich people. 

So you can see that when it comes to money, a lot more has to do with behavior than it is with figures. It is written in Proverbs 21:20, "The wise have wealth and luxury, but fools spend whatever they get."

Seductive Power of Now

Our culture has played a big deal in how we view money. From the time we wake up to the time we go to sleep, money is being spent and not invested. Does this classify us as wise or as fools, I think we know what better to choose. If you asked yourself how much you have spent from the beginning of the year till now, many of you wouldn’t mention and yet a lot of money has passed through your hands. Keeping up with budgets is a hard thing, tracking expenses are equally hard, but the things which are hard to do are the ones that can help us make headway in this money game. 

In his book, how to Secure a financial future, Dr. Sunday Adelaja says that one of the traps of the world system is a culture driven by consumerism. He says that “In this culture, an individual’s value is defined by material symbols. The pressure is tremendous to conform to uniform images of the good life.” He further asserts that the media has played a role in pairing an illusion of the lifestyles of the rich and famous. He then says, “In Africa, cars, clothing, and buildings are important social status symbols. The uniformity of the increasing material desires across continents points to a common driver.”

Adelaja concludes his insight on consumerism by saying, “This trap enslaves, people end up spending their lives, living for food, shelter and clothing. At best they are caught in the bondage of vanities, constantly chasing illusions. They pursue the dreams that they have been fed, to live large, own houses, material things, and have status.”

What has been written above clearly explains the subject of discussion, which is the seductive power of now that’s driven by consumerism.

We have been around people who say, live each day like it were your last. We have seen young people get caught in the web of fear of missing out (FOMO) and all these things have a significant role they play in our money management. 

Yours truly embarked on a weight loss journey. It has taken me sweat, determination, consistency, and willpower to keep going. I cut sugar out of my life, I reduced a lot of consumption of instant foods, and I feel so much better. Denying myself the sweet things has been a hard thing, but it’s the hard things that will always transform us. The lessons from my fitness journey have also had a profound effect on other aspects of my life. I have learned that a keystone habit, once developed, can trigger other areas of your life to get better. I moved from the corner of complaining about my weight and doing something about it to the corner of the action. Instead of consuming, I turned that energy into investing in my family, faith, finances, fitness, and friendships. I used the power of now for gain in things that have improved my life instead of in things that can destroy me.

In his book, the Art of Thinking Clearly, Rolf Dobelli says, “Enjoy each day to the fullest and don’t worry about tomorrow is simply not a smart way to live”. He pauses a question, Would you prefer $1,000 today cash on the table or $1,100 in a month? He says, if you think like most people, you’ll take the $1,000 straight away, but if you hold out for just a month longer, you get $100 more. He further asserts, that, “The introduction of ‘now’ causes us to make inconsistent decisions and this phenomenon is called hyperbolic discounting.” Put plainly he says, “The closer a reward is, the higher our ‘emotional interest rate’ rises and the more we are willing to give up in exchange for it.”

Delayed Gratification Experiment 

Rolf further shared an experiment on delayed gratification (Excerpt from the book the art of Thinking clearly).

In the 60s, a man called Walter Mischel conducted a famous experiment on delayed gratification. In it, a group of four-year-olds were each given a marshmallow. They could either eat straight away or wait a couple of minutes and receive a second. It was amazingly found that very few children could wait. From the experiment, Mischel found that “The capacity for delayed gratification is a reliable indicator of future career success” Rolf then said, “Patience is indeed a virtue.”

Rolf further wrote, “The older we get and the more self-control we build up, the more easily we can delay rewards. Instead of twelve months, we happily wait thirteen to take home an additional $100.” 

You will be tempted with the desire for instant rewards, a little patience, and a little waiting won’t hurt. We shouldn’t let consumerism rob us of the seed that can grow and become a tree that will provide more seed. So let’s have power, let’s have control over our desires for flashy things. If you are to look at where you are and have an inventory of your financial status, your honesty will help you, you will need to sell off some things and invest that money, you will need to downgrade or just live below and within your means. 

As I conclude said Rolf, “The more power we gain over impulses, the better we can avoid the trap of hyperbolic discounting. The less power we have over our impulses, the more susceptible we are.”

Armed with this knowledge, go out and dominate, take charge of your finances, and don’t be a victim of the seductive power of now.

Watch What You Spend On – Don’t Get Trapped by The System and Culture

One of my goals this year is to watch what I spend on and see where necessary make cuts and translate that money into little amounts that can grow then eventually invest it, my spending must be purposeful and reasonable.

  

When we try to impress everyone, We need to know that people really don’t care, all they think about is themselves, you will probably say in your mind, how will people see me if I don’t have or do this, we need know that we shouldn’t do things to impress people but only to serve them. To live to the applause of people, that shows how trapped an individual is.

You will buy the latest iPhone and everyone will be like wow!! however, we need to  remember in a few months a new one will be released and the *wow* effect will be no more because the one in your hand is now old. The psychology used by the developers of these things is to keep us wanting and not really needing. 

The culture of spending is so ripe that people have put aside reasoning to tone down on expenditure, a wise man said that the adverts we see are geared to stir up emotions that cause discontentment in one’s life and they create in us the need for the advertised product with the promise that the product will bring about satisfaction. 

The business people thrive on the culture of consumerism and that is how rich they get while at the end of the day you have spent on something you did not need, people make money off us because we don't have proper plans and lack knowledge, our ignorance is their playing ground, the pressure to keep up with the status quo is pushing someone to say I have the best or I had the best. Howver, having the best will only remain in people's memories but have an impact on your financial future.

In December last year, a friend of mine told me of how they were going to cut costs in regards to a wedding he was going to attend. First of all, a digital card would be made and invites sent on WhatsApp using that card. 

I thought that was a brilliant idea in cost cutting. For the wedding, the things like decoration that take a lot of money, they would go for an open heaven with a few accessories here and there. They saved a lot of money instead of paying the usual $1300 which is equivalent 5m Ugx for decoration. Any way their choice was theirs but also smart, they were thinking about the marriage future instead of just a one-day event. 

I think we need to embody such mindsets as much as there is pressure to impress, remember people don’t really care even when the culture will say you can’t have a wedding of less than this or that. People are getting heavily indebted because of wedding costs, Our marriage counselor told us, save for your marriage and not just the wedding, those words made us plan wisely.

These powerful statements from a book I read recently have given me a much stronger resolve to be disciplined and plan my everyday life.

“The consumer culture in the world is part of the system. The world constantly bombards with things you need to spend money on. Products are packaged in attractive ways to appeal to your eyes. Advertisements, both obvious ones and the subtle ones, are constantly pushing you to spend money, enticing you with your own desires.” – Sunday Adelaja

With the culture of consumerism, an individual’s value is driven by material symbols. In this way the system ensures, no matter how much more you keep making you cannot satisfy all you want. 

The desire of the good life is pushing people to the edge because if they don’t attain this or that, they are aren’t a somebody. One of the worst things happening to some, is that they even save but then save to consume and not invest. People spend a whole year thinking of that summer holiday or vacation, they will do whatever it takes to have that money, when it is all spent, they are back to zero. 

We need to calm down and humble ourselves to understand that our lives are not worth what we possess, the richest things we should embody are values, our worth should be in eternal things, when we have such a mindset we won’t fall into the trap and choose to grow steadily but surely. We have messed up our futures because of instant gratification. But all hope is not lost, we can change the course of events by doing the right thing by starting to have a plan and living by it, is it saving, budgeting, knowing your expenses, investing, etc. Check out this article for more.

#Impact #Empower #Transform

Deal With Consumerism

Proverbs 21:20 (NLT) – The WISE have WEALTH and LUXURY, but FOOLS spend whatever they get.

Are you the type who spends whatever you get, you might have to just check through your life and examine the things that actually make all your money go away and puts you in a place to keep borrowing, are a consumer or an investor, is your appetite for spending great or are you a person who surrounds him or herself with those who are spend thrifts? You could be eating your future a way by the decisions you are making right now - every decision has a consequence. Indeed our lifestyles really dictate our personal finance.

One of the things that we all need to agree on is that we have a large appetite for many things. You find someone having 10 fleets of cars, yet you can only drive one at a time, having 5 smart phones, yet you can only use one a time, having 100 pairs of shoes yet you can only put on one at time, in fact we have a lot of things that we have spent on that are not being used. Everything you acquire should have a purpose, because without a purpose, abuse is inevitable.

We live in a world where a phone manufacturer will release a new version of the same phone but with only one or two enhancements. The first thing that comes to mind then is that we should have the latest (keeping up with the Joneses), so we keep saying I need to upgrade and the upgrading comes with an expense that is not even planned for.

Until we deal with our urge or desire for things, then we shall remain enslaved or controlled by what's coming out there. TV adverts, music videos or even movies have been the place where many adverts are pushed forth and the more we feed our minds on such things the more it becomes normal to acquire things you don't need to impress people you don't know. It is better for adverts to come and find you prepared, because when you are prepared, your spending will be purposeful. You can't be caught off guard and it will also build self control and kill the urge to want what you don't need.

We have to delay gratification if we are to win with money. What we hunger for simply becomes a god in our lives, it becomes our master because we have failed to master money by telling it what to do.

Our lives have also been programmed. You find on such and such a day there is this big event, it isn't bad to go out but it is good to plan your going out to avoid being caught up by the crowd and having to borrow to keep spending to keep a lifestyle that is superficial and isn't adding value but only destroying your destiny.

When you make money, the first thing to do with it, is not to spend but to save. Think like a farmer, farmers always have to keep seed after every harvest for the next planting season. If you have no seed then you might as well have no food. Remember your ego can cost you, selling that car and using a taxi might look like you have dropped but it is just part of the game plan. 

I know of someone who left a very expensive house they were renting and went to a cheaper but still good place. They put off all thoughts like, "What will people think!, My standard has dropped etc", now they live a life of freedom and even have more money to support others, they have stopped living for themselves and have the others in mind.

Here are a few things to note:-

1.Don’t spend money you have not made (This makes many borrow with the hope that money will come, what if it doesn't?)
2.Don’t be under the slavery of your desire or the good life
3.Don’t try and live by other people
4.Don’t eat tomorrow’s food today (Always save)
5.Don't buy out of impulse
6.Plan
7.Work on a budget - A budget tells you where your money should go.
8. Save to Invest (Saving is not for addition, it is for multiplication (be fruitful))
9.Think long term (Be Visionary)
10.Cut down on your expenses.

Read more Is Impulse Spending Ruining Your Financial Goals?