https://www.standardmedia.co.ke/m/article/2001257729/eight-things-to-do-when-you-get-a-pay-rise |

October 19, 2017

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What To Do After Getting a Pay Raise

NAIROBI, KENYA: Getting a pay rise comes with a sense of victory that’s difficult to ignore. It means your work has been noticed in the right places. 

However, much as it’s an achievement, the good tidings it brings along can be lost if you act on excitement alone and fail to handle the extra income properly. 

1. Take the time to understand taxes Don’t plan for the extra income until you understand exactly how much of it will end up in your pocket. It’s easy to get excited about the figure on paper, forgetting that it will be taxed before it gets to you. If you’re familiar with taxation, you can do your own calculations to know what your net income will be, but it may be best to wait until your new income reflects either on your pay slip or in your bank account before you plan for it. 

2. Go slow on increasing your spending You’ve probably been struggling to pay your bills, and the pay rise seems like the universe is giving you a break. However, avoid making any drastic changes in your lifestyle, unless it’s an emergency, such as medical tests or treatment you couldn’t afford earlier. This is not the time to move into a more expensive house, change your car or the furniture in your house, or transfer your children to more expensive schools. Avoid rushing to give handouts to the needy people in your circles, too. 

3. Review your budget This is the ideal time to take a fresh look at your budget, assuming you’ve been operating with one. If you haven’t, then start by reviewing your expenditure over a three-month period. Factor in every expense, no matter how insignificant. Include costs that are not monthly, such as motor vehicle insurance and school fees. Identify areas where the extra income could most impact your life positively in the long term. If you’ve been struggling to just stay afloat, identify areas where you can reduce your expenses rather than simply using the salary bump to keep you afloat. Anything that will translate into increased income in the future is a good choice. Put the extra money into a tool that will grow your income, such as a laptop or a juicer if you are in the design or juice-making business. You’re not likely to go wrong with investing in wealth-growing tools. 

4. Establish an emergency fund Open an emergency fund and save up six months to a year’s equivalent of your living expenses. This will serve as a safety net in case you experience sudden job loss or other circumstances that could dry up your income stream, including an accident, serious illness or death. 

5. Cushion yourself against the burden of dependants Do you have dependants or potential dependants, and who are they? It may an unpopular move, but you’ll need to secure your future by reducing their burden on you. It doesn’t mean cutting them out completely. Are your parents retired? Include insurance cover for them as part of your expenses. Do they have a source of income? If not, invest in a source of income for them so that they don’t have to rely solely on you. Is your spouse dependant on you? Look for ways to empower him or her, such as paying for a short course that will increase their value in the market. My husband paid for my training in public speaking and mentorship when he got promoted – I was previously a housewife. 

6. Pay your debts off Take advantage of the salary rise to clear lingering debts and negotiate new repayment plans, especially on high interest loans. This will not only improve your credit score but also save you money you’d have paid out in interest. Becoming debt free is important for your future financial freedom, so make it a priority before you begin to enjoy the money. 

7. Prepare for retirement The best time to start putting money away for retirement is when you earn your first salary. A pay rise is a great way to secure your later years by increasing the contributions you make to a retirement package. 

8. Reward yourself You most likely worked hard and made sacrifices to qualify for a pay rise. To continue being productive, invest in yourself. Pay for membership in a club or society where you network with people who will inspire and motivate you. Take up a more wholesome diet. Pay for gym membership so you remain physically fit. Pay for an annual holiday or a weekend getaway with your loved ones to relax. 

The writer is a blogger on financial freedom.

Financial Independence Africa
Uncategorized |

October 9, 2017

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The curse of quick cash

NAIROBI, KENYA: People who win the lottery, or find themselves suddenly in possession of large sums of money rarely end up on the list of the world’s wealthiest people. 

This list includes athletes who win jackpots, particularly if they’re from poor backgrounds. People who inherit large sums of money fall into in this category, too. 

In fact, studies have shown that 70 per cent of these people end up bankrupt within five years, and their final situation is normally worse than what it was before the windfall. Here’s why. 

1. A reliance on luck over hard work The number one factor that brings winners of cash windfalls down is who they really are. 

Betting and gambling tend to be common among low-income earners. These are people who are more likely to believe in fate and luck as the way to become wealthy, unlike their better-off counterparts who believe that luck is created through habits like having clear goals and putting in the work to make one’s dreams a reality. 

Successful people tend to have certain characteristics that are responsible for their success; their mindset, skills, habits, discipline, focus, self-confidence and temperament. The nouveau riche do not get the chance to develop these winning characteristics as they did not gradually grow to become successful. 

2. A poverty mindset You’ve probably heard the saying that poverty is a mindset. And that if one doesn’t work on changing this mindset, it’s impossible to get out of poverty, no matter how much money passes through one’s hands. 

A person with a poverty mindset thinks in terms of spending, not growing money. This leads them to unconsciously get rid of money because they’ve been taught it’s evil. 

There are people who don’t see themselves living any other life aside from one of struggle and need, and are resigned to this fate. Even when money is in their hands, they subconsciously waste it in the belief that it wouldn’t last anyway. 

People with a poverty mindset who suddenly get large sums of money are likely to not only have an unhealthy relationship with money, but to also be inexperienced in handling large sums of it. 

The people in their circles do not make things any better. Everyone around them is likely to be needy and desperate for help. Compare these circles with those of the world’s wealthiest people. 

Around the world, lottery winners end up giving away a lot of their money to the needy all around them, and within a few years, are back to being one of them. 

Wealthy people, on the other hand, don’t just hand out cash – they demand a plan, accountability. They also rarely give out money when that’s all they have. They first focus on accumulating assets, and then give back from these assets. They know that cash runs out; assets keep earning money many times over. 

Being surrounded by poor and needy people gives winners of windfalls a false feeling of importance. They tend to compare themselves to their circle, and find that they are so much better than everyone else. 

Because they’re no longer in the league of struggling people, they mistakenly believe they can now afford to solve the problems of those around them. 

There’s a great quote on the curse of the nouveau riche from investor and entrepreneur Jim Rohn: “If someone gives you a million dollars, you’d better become a millionaire so you can keep the money. Success doesn’t want to hang around incompetent people.”  

3. A dangerous relationship with money An individual’s relationship with money plays a major role in determining whether he or she becomes rich or not. That relationship has deep roots; it was learned by experience from a very young age. Did you observe a culture of saving and investing from the time you were little, or a culture of living from hand to mouth? The way you handle money is not learned in adulthood. 

4. There’s no build-up to success There is something that building a business or a career – failing, getting up again and continuing with the journey – does to someone’s development. There are many lessons one learns along the way that produce personal growth. 

The pain of struggling to afford every small thing, as happens in the course of building a business, teaches one how important every coin is. This is the way to learn how to plan and budget long term. 

By the time someone brings their problems to you, you already have the long-term picture of what you need to build and you’re not even sure that the money at your disposal will be adequate for all that needs to be done in the future. You are focused on making your money meet the needs that are waiting. 

Winning the lottery can sabotage long-term success by cutting out the growth process. One becomes like an untrained child, with no experience handling different amounts of money. As a result, money that is not carefully planned for ends up going anywhere.  

The writer is a blogger on financial independence.

Financial Independence Africa
Family, Marriage |

October 3, 2017

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15 Critical Questions To Ask Before You Commit To Marriage

Falling in love is an amazing experience, one that makes those who experience it feel like they could fly. But there is a common saying that love is blind but marriage is the eye-opener. The failure rate for marriages is definitely something to cause concern. Many people who start out madly in love end up in misery after marriage.

Why discuss marriage in a blog about financial independence?

The choice of a marriage partner is critical for long term success in life. You might study all success principles and still find success elusive because of the state of your marriage. The wrong choice of a marriage partner is one of the major causes of failure.

Here are some tips to guide those who are planning to get married. Begin with self-awareness. You need to understand yourself so that you know what you want to achieve in life and what sort of person will complement you.

Do not marry a lady because she is beautiful and physically attractive yet you can’t seem to agree with her about anything. Don’t accept a marriage proposal from a man who criticizes you endlessly.

Don’t marry someone hoping to change them. You will end up living in hell-on-earth, getting into endless conflicts.

Harmony and unity of purpose are critical in a marriage. Ideally, two whole individuals should team up to build a home together. Do not drag down another person by lacking direction.

Marriage is a partnership in just about all areas in life. As you are well aware, it is very difficult to achieve success if the team you work with is forever fighting you and disagreeing with everything you say or do.

Courtship Period

It is possible to do things the right way and the marriage still does not work out. But doing it right reduces the chances of failure. I believe that a courtship period is important before making a decision to get married.

Date long enough for the mask to fall off so that you get to know the real person. Do not rush to commit to marriage during the infatuation or the ‘love is blind’ phase. Use the courtship time to get to know each other and to ask all the relevant questions.

Do not make getting to know one another like an interview. Just make sure that you have clarity about the questions you need to ask and that you have them at the top of your mind at all times. Discuss these issues while dating. You have better bargaining power during courtship than after marriage.

1. Find out as much as possible about each other’s upbringing. How was the relationship between the children and the parents? Did the parents shout, belittle, control or unfairly compare children? Was expressing emotions such as anger and frustrations permitted and empathy available? How were mistakes handled? How was communication and conflict resolution in the family?

2. Get to know each other’s parents. Much as you would want to convince yourself that all that matters is the person that you are going to get married to, a dysfunctional parent-children relationship is a major contributor to marriage failure. If your partner has an unhealthy relationship with the parents, it will spill over into your marriage and cause problems. Find out about boundaries with the parents. Will you be expected to live with them or to support them financially? Will they have a say about decisions in your marriage?

3. Value systems. What is the foundation of your value systems? Is it religion, personal convictions, culture? What are your value systems about morality, lifestyle such as socializing, partying, drinking alcohol or going out without one’s spouse?

4. Past relationships and whether each of you has healed from past heartbreaks, betrayals, and mistreatment. Will the past interfere with the future? Will it cloud judgment?

5. How important is religion? The more important it is, the more crucial it is to discuss the matter comprehensively. Do you have to agree on matters religion or do you have the freedom to practice your individual religion? Should you have children, whose religion will they follow? If both of you feel very strongly about religion and you are both pulling in different directions, the boat is definitely going to be rocked so do not take the matter for granted.

6. Will you have children? How many? When? What targets do you need to achieve before you can get children? How will you handle the responsibility of bringing them up into well-balanced citizens? Will you share responsibilities such as helping the children with homework, training them, spending time with them, feeding and soothing small babies?

7. Gauge each other’s relationship with money, which is largely learned from a young age. Observing family dynamics can reveal a lot. Watch out for mindsets and patterns. A poverty mindset is responsible for unhealthy spending habits such as hoarding money for fear of spending or the opposite habit of spending carelessly. Statements such as “I/we can’t afford it, money is not everything, you love money, money does not grow on trees…” should raise red flags about a poverty mindset.

8. Debts and liabilities outside the immediate family. Look out for credit card debts, student loans and bank loans. Responsibilities such as having dependents should not be ignored. These could be dependent parents, siblings or children from earlier relationships. Discuss how debts and extra responsibilities will be handled. Is mine ‘mine’ and yours ‘yours’ or will you handle them as ‘ours’?

9.   Independence. To what extent will each of you have freedom to be yourself? Can you have friends, hobbies, careers, and activities that you do not share with your partner? Every individual has a life before getting into marriage. Will you partner expect your life to end once you get married and that you have to do each and everything together, probably even give up on your hobbies, social circles and career?

10. Relationships with members of the opposite sex. Are you at peace with the fact that your partner works and interacts with people of the opposite sex? What about knowing that your partner finds others attractive? Can you comfortably discuss with each other about your interactions with members of the opposite sex and what one finds attractive, without such discussion causing insecurity?

11. Sex and intimacy. Differences in this area can be a deal breaker. How important is sex to both of you and are you both on the same page? Does any of you consider anything taboo? Are you comfortable discussing with each other your preferences?

12. What attracts you to each other? Is the attraction real or just a passing fantasy?

13. Do you understand what it takes to build a fulfilling relationship? Do you understand about affection, spending quality time together, respecting each other’s boundaries, encouraging and motivating each other to become better, respecting each other’s dreams and aspirations, bonding, and sharing some activities and social circles? What are your expectations of the roles and responsibilities of each in the marriage? Can you compromise?

14. Dreams, goals and aspirations. How do you see yourselves 10, 20 years from now? Will you still be relevant to each other? How do you picture yourselves after retirement? What kind of life would you want to have after retirement?

15. Careers. Many people have already made some strides in their careers before getting married. How important are your careers? Will you give each other room to progress in your careers? How will you ensure that your relationship does not get neglected as you pursue your career goals?How will you maintain work-family balance?

16. Medical history. This is very important and should not be taken for granted. Is either of you on treatment for any medical conditions? Has one undergone treatment in the past? Are the conditions chronic or could they recur?

The more you know about each other, the better prepared you will be to build a strong foundation for your marriage. I recommend some kind of premarital counseling before embarking on the road to marriage. Matters such as childhood trauma and upbringing issues need to be dealt with professionally if you expect to be set free to live a fulfilling life. Finding a common meeting ground and setting long-term goals requires professional help too.

Are you in a relationship and would like help to get clarity about yourselves before you commit to marriage? Book a free session here.

This article is written by Susan Catherine Keter

Financial Independence Africa