Early this year I decided to make a few adjustments in my life. Adjustments that were going to come with a new life style.
A new way of life which is going to translate into new lifestyle expenses.So in order to make this transition I decided to make a few investments to fund this new lifestyle and thats exactly what I am doing as I prepare for next year.
The auto spa ,mpuuta joint and a small farm are all meant to finance this transition.
The difference between the rich and the poor is the rich make investments that are supposed to finance their expenditure as the poor keep using the same income purse to fund more and more luxurious or lifestyle expenditures.
Let me give you a practical example. You are a man and earn about Shs 1 million every month. Your plan in the next year is to have a family, meaning your going to start living with someone.
A kid is likely to come into the picture and this comes with a maid in today’s times. The idea you’ll be having in-laws visiting or even sleeping over becomes a new possible reality.
So if you had your house that was just fine for you alone it means now you need a slightly bigger house. This could take your rent from Shs 300,000 a month to between Shs 600,000 and Shs 800,000 a month. This is double the cost for only one aspect of your lifestyle change.
If your monthly income is still Shs 1 million then it’s going to be hard to survive comfortably like you did when you were alone. So this will mean finding away to increase your income a bit to accommodate your new planned life style and the costs that come along with it.
The next question you’d be asking yourself is: what can I do or invest in to bring in that extra money needed to cushion the extra costs?
Okay lets assume you want to buy a car. You’d have to look at how you have been moving around of late. You have been using Shs 10,000 daily for transport which is 300k a month on a monthly income of Shs 1 million and by income I don’t mean salary alone but all avenues that bring in money predictably.
Now you will averagely spend Shs 20,000 daily on fuel meaning your transport costs will raise to Shs 600,000 minimum monthly.
This also means you now have Shs 300,000 less than usual to spend on other things like you used to. So before buying that car, the financially wise thing to do would be to find a way to finance this new cost.
For example, put up a chapati stall that can give you Shs 20,000 a day to be able to finance the fuel for the car. It doesn’t necessarily have to be a chapati stall, that’s just an example. It could be anything, the thing is to find an investment to finance your new costs .
The whole idea here is before you create new expenses, create new income streams to be able to finance your new expenses. Before you generate liabilities, create investments to be able to offset the new costs that come with your luxuries.
That’s what differentiates those who are financially free (financial freedom) from those that are financially struggling (don’t want to refer to them as poor).
Jaluum Herberts Luwizza is a Speaker,Writer and Business Columnist with the Nile Post.He is also a Business Consultant at YOUNG TREP East Africa’s No.1 Business Management and Consultancy firm that helps people start and grow profitable businesses and YTS Associates Certified Public Accountants.