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Are you planning to upgrade your phone/car/TV/couch etc because the ones you have no longer make you happy, or there is a newer version that has been released? Before you do, read this post to the end to see the true value of that upgrade. 

What is your definition of success? I find myself in conversations about this, sometimes as a willing participant other times a listener.  It is always fascinating to hear what our success markers are / what we define as living a good life. In our society today, I would not be wrong to say we have come to see these things as success markers:

  • The cars we drive. I have always wondered where Nairobians take their older cars because we always seem to have newer and newer models on the road.
  • The houses we live in, and the addresses those houses are on. It is not enough to live in a good house, the house must be at an address that insulates you from the common mwananchi problems such as dust, loud matatus, too many people, and water shortages. The last one is getting harder and harder to achieve.
  • The kinds of jobs we have. This is why, “what do you do?” is the first thing people ask after you are introduced to them. We want to know what people do, so we can decide whether to be impressed with them or not.
  • The phones we own. This is no joke, the jokes about

The problem with pursuing what we call “nice things” is that you will never have enough of “nice things”.

Corporations exist to make sure of this. Advertising exists to convince you that you have not truly made it until you acquire the next nice thing. There is always a better car, a better address to move to, and even when you get to the peak where you travel by private jet, there is a bigger jet to buy.

If your goal is to always have nice things, then you are setting yourself up for a lifetime of work to keep buying that stuff. This is because as you have seen above, external factors determine what nice things are, and the goal posts keep shifting.

Today’s latest iPhone is tomorrow’s old iPhone in need of an upgrade. 

If the idea of working to buy stuff does not sound appealing to you, consider taking a utilitarian approach to stuff. The things we buy are here to serve a purpose. A car is a means of transportation – and if we lived in a better country, it would not even be the most efficient way of moving around. A phone is a communication tool. A computer is a work tool. A television delivers entertainment (and sucks up our time as it does so). A house is a shelter over your head.  And so on. 

The advantage of shifting your outlook this way is that the stuff we own stops being a success marker. They are only as good as the utility they bring to us. There is, therefore, no need to spend more than we need to on these things unless the added utility far outweighs the price we are paying for it. A utilitarian approach makes contentment a possible goal and makes you less susceptible to external influences and more likely to achieve financial freedom. 

How much is stuff really worth??

Instead of accumulating stuff, we then can focus on building experiences that last and truly add value to our lives. There are two ways of investing in experiences: 

  • “Buying” experiences. This is the most discussed form. Where we spend money on travel and other such experiences that make us happy; or
  • Buying time. By choosing not to pursue a consumerist lifestyle, we are buying time with our loved ones, and time to pursue stuff we are passionate about even if that stuff does not make us as much money. 

Think about this: if I told you that your next car upgrade will cost you three years of time with your family (or even chill time), would it be worth it? Well, let us do a simple calculation. 

Let us assume you are a well paid Kenyan earning say KES 250,000 per month, and you have a couple of side jobs that bring in another 70,000 bob per month.  So every month, you are earning KES 320,000. Assuming you spend 50 hours a week making this money, it means that your gross pay per hour is KES 1,600. Take away about 28% in taxes and your take-home pay is KES 1,152. 

Say you want to buy a Subaru Forester that is worth KES 2 million bob. At a take-home pay rate of KES 1,152, it means to pay for the car, you have to dedicate 8.8 months of your work to this and nothing else. If you usually upgrade your car every five years, this means that 14% of your time at work goes towards funding the car – which depreciates. This assumes you have saved the money. However if you are like most people and will need to borrow to finance the car, add another 0.5 million shillings to the cost, which means you work for 11 months for nothing but the car. What about the additional cost of insurance and maintenance because you now have a more expensive car? You will easily need to work for a year every 5 years, to finance your car!

That is not the only cost though. The second cost is financial freedom potential you are forgoing by choosing to work to buy a car. Assuming you would like to retire in 15 years. By choosing to spend KES 2 million bob on the car (instead of investing it), you are actually forgoing KES 5.5 million (net of inflation) of retirement income. To do this calculation, I assumed that your investment grows at 12% annually, and of this, 5% is inflation.  That is another 17 months of work to pay for your car. Is it worth it? 

Only you know. 

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In an ideal world, we would not need to borrow money, and it would be quite easy to live debt-free. I see this from personal finance bloggers in the developed countries that I follow. They do not make much money but because they live in relatively predictable societies where, your healthcare is funded (or at least the cost of funding it is fairly predictable), kids education is funded to a certain level, and their day to day life is predictable, they are able to calibrate their lifestyles to fit their income level.

This is not the case for us on this continent. You may have a budget set for the month, then out of nowhere there is an emergency in the family. Or you fall sick. Or your paycheque delays. Or the government announces that they will start deducting 1.5% of your pay towards a Housing Fund you know nothing about. Finally, takes too long to build a decent investment portfolio, because of these things I just listed. Such is our life!

This makes borrowing money more or less a necessity for us.  Debt is not good or bad, how you use it is what matters. The question then becomes, how do we use debt to our benefit?

This post is specifically about Fuliza M-Pesa because from the comments on my social media, many people do not understand how it works and are therefore not using it wisely and to their disadvantage. Fuliza M-Pesa is an overdraft service from Safaricom, which differs from conventional loans or even M-Shwari loans:

  • It is not a cash deposit in your account that you can withdraw as you please. An overdraft allows you to complete a transaction you are undertaking.
  • Unlike M-Shwari for example which you borrow and repay as you wish, an overdraft takes your M-Pesa account into the negative, meaning that as soon as you get a deposit, Safaricom recovers the amount plus the interest.
  • Because overdrafts do not require security and you get money on demand, they are typically more expensive than conventional loans.
  • However, the more judiciously you use the facility, the higher your credit limit goes, allowing you to borrow more and more.

So what is Fuliza M-Pesa suitable for?

The first group that should find Fuliza useful are business people.  Getting business credit is not easy in Kenya, especially if you have a small business. At the same time, payments always delay and bills must be paid. Fuliza M-Pesa is an easy way to get that bridging cash inflow when you need it. If you are running a small business, then it is worthwhile to build your Fuliza credit up so you can utilize it to save your business when you need to and to take advantage of quick deals.

When it comes to personal use, we start with two questions:

  1. Are you borrowing to meet a need or a want?
  2. If it is a need, is it one-off, or regular?

The plain truth is that you do not need to borrow to finance your wants. Wants are temporal, if you give yourself time, the desire for it will pass. You do not need to Fuliza to pay your bar tab. With needs, it is more nuanced. You may need to borrow because your paycheque has delayed, someone is sick, or you need to buy food for the week. The most important thing is to use the facility wisely:

  1. If you’re using Fuliza to pay for day to day expenses, it’s possible you are buying things you did not buy before that you are now buying just because the credit is available. Track your expenses and cut down where there is unnecessary spending.
  2. If Fuliza is substituting other forms of more expensive credit that you use, then that’s ok, but work on a medium-term plan to get out of the debt cycle. This video will help you to wean yourself off debt. https://www.youtube.com/watch?v=JbvCmCZeroc
  3. If you are using it to fund emergencies, consider putting in place an emergency fund so that you do not get sucked into the borrowing cycle.
  4. Finally, if you borrow please repay. It is smart to have good credit when you need it, and you do not want to risk a CRB listing as it blocks off all other potential sources of credit.

Our aspiration is to be smart credit users!

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If you follow me on Twitter, you know that I am a big advocate of bulk/wholesale shopping for household goods. For the last three years or so, I buy most of my home supplies in a wholesale shop. I started doing this to save money, and with time it has become second nature – and it still saves me money, especially now when the prices seem to be going up every other day.

I have a standard shopping list that I use to shop once every 3 months, which means I do major groceries shopping about four times a year. My major purchase groups are:

  • Dry food items e.g rice (this I sometimes buy in Mwea when I travel home), wheat flour, pasta, spaghetti
  • Condiments and spices e.g tomato paste, tomato sauce
  • Bathroom supplies – tissue paper, bathing soap, shower gel, hand wash, lotion, toothpaste
  • Kitchen supplies – serviettes, foil paper, cling film etc
  • Laundry supplies – powder soap, bar soap, fabric softener

Basically, the only things I do not buy in bulk are perishable goods.

The obvious benefit from bulk shopping is that I save money. By buying things in bulk, the per unit prices are much lower, and I directly save up to 25% by buying in bulk as opposed to shopping in the supermarket as I explain in the experience video below.

Does wholesale shopping save you money? - YouTube

There are three less obvious benefits. The first is that I save money indirectly by not spending much time in the supermarket. See supermarkets are designed to entice us to shop more. From the lighting to the way items are arranged, they are supposed to encourage us to walk around and just mindlessly add things to our shopping carts. I have not managed to avoid supermarkets entirely – I buy milk and bread weekly, and will sometimes buy greens from there. The difference between buying 3-4 items, from shopping for the month there is that I no longer walk around looking for stuff to add to my cart, and these basics can be bought from the neighbourhood supermarket which isn’t fun to explore.

The second indirect benefit is that I save time. By lumping up 3 months’ worth of shopping into one trip, I spend my weekends doing other things, and I also do not make unnecessary shopping trips to pick 1/2 items.

If you do not shop in bulk, consider trying it at the end of this month, and let me know how it goes. If you usually shop in bulk, which are you favorite outlets, and why? Do share in the comments section.

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Unless you just started reading this blog today, you know that 2018 is our fourth year on the #52WeekChallenge. The first year was very low-key. I basically uploaded the introduction post and did a few Twitter updates without thinking much of it, only for it to explode in December, when some people reported their results and others vowed to join us. The next year (2017), M-Shwari came on board as a sponsor for the first time – they are still a sponsor this year and this time with mega prizes. That was an exciting experience and throughout the year, the community was alive with monthly updates.

Come 2018, I resolved that we were going low-key, first to reflect on the lessons so far, and see what we can do to further develop the #52WeekChallenge and get as many people as possible saving. So while I did try to do a few updates, the level of accountability was not as high as 2017, and that was my first mistake – fewer of us did the Challenge, though those who did really grew their savings.

My second mistake was in my own personal saving journey. Having successfully done the KES 50 and KES 100 Challenge in 2016 and 2017 respectively, I wanted to go big, and save for something I had been procrastinating about for a couple of years: my Master’s program at the University of Cape Town. To even make a significant dent on my first semester’s fees and upkeep expenses meant that I had to really up my game, and do the KES 500 challenge! I took a deep breath and jumped right in. As I write this post, I am in Cape Town, for the first session of the program. I did it! Putting this goal on my #52WeekChallenge did something great for me. I was able to save up for something I otherwise would not have focused on saving for. In the past, I would save a bit then get distracted and invest it, and this is partly why I have waited 13 years post-undergrad to do my graduate program.

How was this a mistake?

When I was doing my annual expense review, I noticed one thing: My eating out expenses had shot through the roof in 2018. I had spent 50% more eating out in 2018 than in 2017, and this explained a lot (I am also at my heaviest weight-wise). The reason this happened was I was so focused on the big goal that could only be met with big money, that I stopped watching the small amounts – the pennies/shillings and cents.

The money is not the only thing that was bad about this, but also the fact that less than 5 of the occasions I ate out were truly memorable. Most of the time, I would randomly buy food or order in, and I did it so much that I got to the point of where eating restaurant food was just ordinary – I tend to eat from the same restaurants. There was no significant difference or satisfaction. Had I saved the extra expenditure, I probably would have been able to go on another holiday – for me, holidays are high on the satisfaction rating because my regular life is pretty stressful.

So how am I doing it differently in 2019?

I have split my #52WeekChallenge into two:

  1. The big goal which is to save for the rest of my tuition and some extra amount towards a long-term investment I would really like to make – I want to buy some land and plant trees.  It is impossible to save for these two goals from my salary, so I have goals to get  50% of my salary every month in extra income. It is an ambitious goal, but 2019 is THAT YEAR!
  2. The “small goal”, is to save KES 100,000 from my consumption budget. This means I do not dip from Goal 1’s savings to meet any deficits I might create by things like eating out. It also means challenging myself daily to watch where the shillings are going.

Finally, this year I am keeping you all accountable, as a way to staying accountable to myself!

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A recent announcement in the media about doubling of withholding taxes on SACCO dividends has caused a frenzy on social media, and rightfully so. Kenya is the African country with the largest cooperative movement, and SACCOs continue to play an important role in our personal finance and investment journey. In addition to this, the annual SACCO dividend and bonus season is always a joyful time  – when we see an actual return to our investments and savings in the SACCOs. This announcement however had some misinformation and therefore I consulted Ushuru.co.ke to help clarify what the real position is.

This post looks at how SACCOs are taxed, and the actual position on the withholding tax on SACCO dividends. It will focus on two types of SACCOs: SACCO societies (the ones we join to save and take loans from, and whose primary source of income is the interest we pay on those loans), and investment SACCOs, whose primary source of income is investments.

Background on SACCO taxation

For purposes of taxation, the primary SACCOs that individuals are allowed to join are classified into two, and each type is treated differently by the taxman:

  1. Primary SACCOs with investment income. These are what we call investment SACCOs. They are taxed at two levels: First, just like corporations, they pay an income tax of 30% on their net profits. However, unlike corporations, in computing the net profit, they are allowed to deduct any dividend or interest paid out to the members, though they are only allowed to pay out a maximum of 80% of their total income to members (this provision is meant to guard against tax evasion by paying out all income as dividends). This provision also means that the taxman is assured of taxable income every time members also get an income.
  2. SACCO societies, where we join to save and take loans. For these SACCOs, interest earned from loaning money to members is tax exempt. The SACCO may make other interest income (say from bank deposits). 50% of this income is subject to 30% income tax. The third level of taxation for SACCO societies is other incomes such as rents, dividends, capital gains and commissions which are subject to taxation under specified sources of income.

How SACCO earnings are taxed and the proposed increment

The second level of taxes is what the members pay. We call this tax, withholding tax. It is a tax that is deducted at source, meaning that you do not need to pay it yourself, the SACCO deducts it off your earnings before paying them to you.

SACCOs typically pay two types of earnings to their members:

a. Dividends, which are a percentage of your share capital in the SACCO. Share capital is what differentiates you as a member from other parties that may deposit money in the SACCO. Most SACCOs have a designated minimum share capital amount one must contribute when joining, and this forms the SACCO’s core capital. In many instances, share capital is not refundable when leaving the SACCO, and the only way to recover your share capital is to sell your shares to an existing or incoming member.

b. Interest. This is a return on your deposits on your SACCO. Your deposits are what you use to calculate your loan eligibility. Typically, deposits can be withdrawn at any time provided you do not have a loan, and should you need to leave the SACCO, you are entitled to your full deposit refund.

Previously, SACCO earnings (dividends and interest) were subject to a 5% withholding tax for residents and 10% for non-residents as a final tax.

There is now a proposal under the Income Tax Bill, 2018 to increase the withholding tax on SACCO earnings from the current 5% to 10% – double the current rate. It is important to note that this change has not yet been implemented. This year’s SACCO earnings will be taxed at 5%.

This tax increment has the adverse effect of discouraging saving, and it is our belief that it should not be passed by parliament. The issue has been opened up to public participation and you can write to the Treasury to protest its implementation.

Featured image credit: rawpixel

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This week we finally completed a 3-part series on debt. If you have some time to spare, please watch the three videos below, and share your thoughts in the comments section. I am especially curious about if you borrow, what you borrow for, and your thoughts about mobile loans.

1. Saving vs paying off debt

What should you do if you have some extra cash and a loan/loans? Should you pay off the loan or save the money? This video evaluates the two choices and offers a solution.

Should you invest your extra income, or pay off debt? Get Out of Debt (Pt 1 of 3) - YouTube

2. Weaning yourself off mobile loans

If you are using mobile loans a lot, then it means either you are living beyond your means, or that you need to set up a buffer for emergency unexpected expenses. This video looks at why mobile loans are an enemy to financial freedom, and how to break free of them.

Get Out of Debt (Part 2 of 3): How to wean yourself off mobile app loans - YouTube

3. Good debt vs bad debt

Debt in itself is not bad. What you spend the money on, and your ability to repay that debt while pursuing your other saving and investment goals. This video looks at this, and also shares two methods to pay down your debt.

Get Out of Debt (Part 3 of 3) - Good Debt vs. Bad Debt - YouTube

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Have you joined the #52WeekChallenge powered by M-Shwari? To join, set up an M-Shwari Lock Savings Account, start saving and you just might get a cash reward. As I post this, we are kicking off Week 4 of the #52WeekChallenge, use the MoneyBox App (for Android) to calculate how much you are supposed to save on a weekly basis and start today!

In the previous post, I gave three reasons why even the best of us fail at following our budgets. This post looks at how to budget better, and gives an alternative to traditional budgeting which enables you to manage your money without a budget!

If you want a budget to work, base it on reality

The first reason why budgets fail is that we create budgets that are based on the ideal, and not the real us. They are not grounded in the reality of our spending habits but are based on what we would like to be.  A good way to budget is to be a bit more deliberate in your budgeting process, with the intention of creating a budget that is reflective of your reality. This means tracking your expenses for at least 3 months, then analyzing those expenses and creating budget categories (and allocating amounts) based on your actual lifestyle and spending habits.

The risk with this approach is that it might tell us truths we may not be ready to hear. We may discover that we are spending more than we are earning – and on things that do not give us long term joy. If this happens, acknowledge the feelings, then put in place a strategy to change things. This post on setting goals might be helpful.

I loved this comment on the previous post on how to build buffers in your budget:

Start from a realistic base -what’s the total amount I actually get vs what I’d wish to get into my account .
Include bank charges in all your planning.
I work with a maximum amount of spend as a bandwidth as opposed to a specific amount I need to spend .e.g I know I’ll spend 25k max on shopping (groceries(non perishables and , food ) for the month .so considering I shop wholesale , my spend will vary but shouldn’t go above the bandwidth. Another example is water – I pay to Kanjo -The maximum I’ve seen is 1900 kes but it can go as low as 1,400, so I plan with the 1900 shillings. If the bill is lower, the difference goes to sort something else .

Fixed costs that don’t vary have to be paid first before anything else -Rent, nanny , estate security , garbage , etc everything else is variable and to be planned within the bandwidth .

Automate your savings– preferably deducted at payroll so that your net amount doesn’t include the savings bit. Moving money when AOBs like a sick relative show up can be difficult sometimes.

Leave some money for miscellaneous items if you can. There’s always something that will come up that wasn’t planned for. Its easier to compensate mentally and leave the compensation undone in the money bit

Lastly all that should sum up to what you actually earn less bank charges and M-Pesa charges. More often than not we don’t include this in our planning yet it’s a spend whilst spending. ~ Velisa Adega

Budget only once

The principle behind budgeting is that it should protect you from compromising your financial future for current spending. This approach does not require you to maintain a monthly budget, but instead, you make budgeting a once a year or even once every 2 years endeavor. Here are the main steps to follow:

  1. Undertake a financial planning exercise, where you look at your long term plans (things like retirement or kids’ education for those who have or plan to have children), your medium-term plans, and things you would like to do with your money for the next 12 years. You may use a financial advisor to help you calculate how much you need to set aside for each of these goals. Do not be scared, using a simple calculator, you will realize that long-term goals demand really little of us especially if we have time on our side. Every earning 20-something year old should go through a personal financial planning session to be able to take advantage of their greatest asset – time. 
  2. Secondly, calculate your monthly needs (essentials), and your non-monthly essentials such as insurance. Divide the non-monthly amounts by 12 to know how much you need to save every month.
  3. Open two zero-charge savings accounts (or even money market accounts, though if you are likely to procrastinate on this, go with the savings account). The first account will be for (1) above, and the second for (2).
  4. Set up standing orders of the amounts needed in each of the two accounts. The effective date for this standing order should be the day after you get paid.
  5. Whatever remains in your account is your money for bills, and to play around with. You do not need to budget it or track it.

To avoid running out of money mid-month, pay your essential bills (excluding food), then divide whatever that remains by the number of weeks in the month. This is your weekly spending allowance. I have excluded food, fuel, clothing etc from essentials because while these are needs, they are controllable costs. There are many creative things we can do to save money on these items.

The Envelope Method will help you stick to your goals

Personal finance means finding ways of managing your money that are aligned with your personality. If you want to manage your day-to-day spending yet the month is always shorter than the money, consider using the Envelope Method.  This is a manual budgeting method where you divide your money into different envelopes as per the spending category e.g dry foods, groceries, eating out, entertainment etc. Then you spend the money as per what is in the envelopes. Once an envelope is empty, you close that account. At the end of the month, you can save what remains towards a goal using the #52WeekChallenge. As the Velisa commented, other than the essentials, everything else is variable, and the envelope method helps you manage your variable costs.

Read more about the method here. Let me share though that this method did not work for me in 2013, because I would often carry my cards and swipe or use M-Pesa instead of cash. I want to give it a second shot, this time I will leave my cards at home, and see if it works.

Track your expenses (if you are into that)

If you are a figures person, and you like to see where everything goes, then track your expenses. You can use an app like Wallet, YNAB (both available in the Google Play Store) and others, an Excel spreadsheet, or even noting down the expenses in a notebook or on the respective envelopes if you are using the Envelope Method.

The discrepancy between how you like to spend your money, and how you actually spend it might surprise you. My spending last year was a real shocker.

Ultimately, remember that personal finance is personal, but our goals (especially long-term), are very similar. You want to use a method that works with your personality, and also protects your money from you.

Photo Credit:Autumn Mott Rodeheaver

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Ever wondered what your money personality is? This short quiz adapted from Ask The Money Coach by Lynette Khalfani-Cox might give you a rough idea. Like all quizzes it is not scientific, and we tend to have a combination of traits, but it gives a pretty good indication of our thoughts around money.

Take a piece of paper and answer the questions below. Try not to overthink them, you want to respond based on your instinct, and what you would actually do- not what a “better” money version of you would.

1. If my car breaks down, if I need KES 50,000 for a parent’s medical expense, or some other emergency happens, then:

a. I don’t think it would be a problem, because I try to put aside money for emergencies.

b. I would be financially stressed – yet again. My money is so tight that even though I want to put aside some extra savings, so far I haven’t been able to do so.

c. I’d use the savings from my emergency fund that I’ve built up over time. Hopefully, it would be enough to cover any situation.

d. I would just use my credit cards to pay for it, and figure out how to pay them off later.

e. I probably wouldn’t panic since I tend to budget for those kinds of things.

2. Right now, my retirement investment account:

a. Is growing slowly but surely.

b. What retirement savings account? I can barely pay the bills I have today.

c. Is fairly well funded. But I still worry about outliving my money.

d. Is next to nothing. I’ve only put aside a little bit for retirement, or I’ve had to borrow from my retirement account to make ends meet.

e. Is right about where it should be. I’m on target to reach my retirement savings goals.

3. If somebody gave me KES 2 million unexpectedly, my first thought would be:

a. “Great. I’ll be able to add a chunk of this money to my investment fund.”

b. “Now I can buy something I’ve wanted to get for myself, a family member or friend.”

c. “I’ll put this money away for a rainy day. I might need it in the future.”

d. “Yes!!!!!!!! Time to upgrade my phone, TV, home furniture, and take a holiday!”

e. “How can I invest this money wisely?”

4. When it comes to mobile loans and credit cards:

a. I almost always pay off the entire balance when it is due.

b. I often pay the minimum payment or have missed a payment recently.

c. I have no debt because I rarely use credit.

d. My phone is full of texts from mobile loan companies because I owe them so much

e. I use debt only on an emergency basis.

5. I would describe my financial records as:

a. I regularly balance my books and at any one point, I know how much is in my accounts. I  am not sure how much I spend on each spending category though.

b. Slightly disorganized. I really don’t keep close tabs on my financial documents – my bank balance sometimes surprises me.

c. I keep detailed files and organized paperwork.

d. My financial records are a mess; besides, I hate keeping receipts.

e. I use a computer spreadsheet (or an app) to track all my finances.

Now review your answers to see the letters you checked most: As, Bs, Cs, Ds, or Es?

Scored Mostly As: SAVER

You regularly set aside money, and make a point to build a cash cushion for a rainy day. The greatest risk a saver faces is that you tend to be risk-averse and therefore will keep money in the bank account (or other low-risk, low return accounts), and therefore your money does not grow as quickly as it should. Your money may even lose value because it is growing at a lower rate than inflation.

Recommendation: Dip your toes into investments, and slowly grow your comfort level around risk. You can start by consulting an investments professional who will help you draw up an investment strategy that takes your personality type into account.

Scored Mostly Bs: SPENDER

You spend everything you earn (and possibly more than you earn), and you are living paycheck to paycheck and are most probably carrying some credit card or mobile loan debt. You are often tempted to buy frivolous or luxury items that you can’t afford. You have a hard time budgeting, delaying gratification, and saving. You find yourself fantasizing about a big payday that will sort out all your financial troubles – your current income is a temporary setback.

The greatest risk a spender faces is that you will retire poor. There is no big payday coming, and even if it did, your spending habits would leave you with very little money for the future.

Recommendation: Some introspection, to evaluate why you feel the need to spend – is it emotional, or are you a victim of peer pressure and the need to show your peers that you are doing well? Secondly, start changing your habits by protecting your money from yourself. Automate your savings and investments. It will feel counter-intuitive at first, but with time you will learn to live with less money. A realisation that the people around you do not care as much as you think they do (about your possessions) may help. Spend time appreciating what you have, and maintaining the stuff you already own. Avoid spending triggers (advertisements, visiting malls, etc). If you are addicted to spending, it may help to seek psychological support.

Mostly Cs: HOARDER

Not having money makes you anxious, and you worry excessively about the future. As a result, you do everything possible to save money, to the extent of compromising your well being. You probably invest close to everything you earn, because your lifestyle is super-frugal. Many things that people consider fun or essential are a waste of money to you.  Hoarders are at risk of denying themselves and their loved ones some conveniences that make life easier and dying without having enjoyed their money at all.

Recommendation: Hoarders’ need to hoard money (and the reassurance having money gives them) may come from money trauma in the past. Maybe growing up their parents enjoyed financial security which was taken from them suddenly and this caused suffering. There might need to seek some psychological support to deal with that anxiety. If you are a hoarder, work on getting a balance between being safe for the future, and enjoying your money today.  Remember that once you are not around, those around you will enjoy your wealth unreservedly. Put in place some risk management measures (a good medical cover, life insurance, a will), and that will give you some relief from the anxiety.

Mostly Ds: THE SPLURGER

You may not spend everything you earn. You are a fairly good saver and even have a decent investment plan. Your biggest money weakness is that you are an occasional, impulsive spender. You are prone to random big expenditures (that you sometimes regret). You see these expenditures as a way of rewarding yourself for the good job you have done so far.

The biggest risk facing you as a spender is that your expenditure often undoes any investment gains you make. You lose out on the benefit of compound interest.

Recommendation: Protect yourself from your money by limiting the amount of cash you have at your disposal at any one time. Lock the savings you make, put in place systems to re-invest all the earnings you make, then on occasion you can consciously reward yourself. The most important thing is to not have money lying around.

Mostly Es: Goal Setter

You are privileged to belong to a special group (even I am not in this group) that is very rational and sensible about their money. You only like to spend your money on items or activities that are budgeted, carefully calculated, or and/or planned in advance.

You are on course to meet your investment and retirement targets, and generally, you do not have much anxiety about money.

Stay on track!

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