Thread by @Onjerika

I've come to the realization that many of us Kenyans didn't have the advantageous of growing up with financially savvy parents who passed on some wisdom. So here is my #personalfinance thread.

1. The best time to start was 20 years ago. The second best time is now... 1/n

2. If you can, save at least 25% of your income per month. You get about 40 years to work. And if you make it to your 90s have about 30 years of living post retirement. Your 40 years of work need to support your 30 years of retirement. So if you can save more than 25%, do it.

3. Save first. Spend what is left after. Have a very strict saving amount every month. Make your spending fit into the rest.
4. You can save more by doing one of two things: earning more or cutting your expenses.
5. Scrutinize your expenses a lot. Use apps like Monefy... 2/n

to track exactly where every coin is going and I mean every coin. Compare pricing. Shop at wholesalers and farmers' markets instead of supermarkets, bulk instead of single.
6. Keep your expenses money in different accounts and spend only the allocated amount for... 3/n

for the item it is allocated to. That way you have your fun money too and don't feel like you are earning but miserable
7. Do your monthly budget for your income minus savings bit before the money arrives then send everything to its allocated account immediately it arrives... 4/n

Get the cash as far away from you as possible especially savings as soon as possible.
8. Switch from MPESA to cash and debit cards. MPESA charges will eat into your money needlessly. You are probably wasting 2K per month on MPESA. A lot of money.
9. One of your expenses... 5/n

should be insurance. For whatever amount you can reasonable afford. Insure your property, your life and your health. Basically, secure what you already have. It can be lost and that can really set you back financially... 6/n

10. Send your savings somewhere you cannot access it easily e.g. a SACCO. You will need to investigate not only the interest rates the SACCO has historically paid, but also its management and financial soundness. Take to an auditor friend at least... 7/n

11. DON'T guarantee anyone's loan. Never. Do not expect to be guaranteed either. You are in the SACCO to bulk up you money for investments while earning interest that grows your money ahead of the effects of inflation (read up on that). In Kenya today... 8/n

if you are earning less than 8.5% on your money, you are losing money to inflation.

12. Never leave money in a bank account. If you plan to use it in a few weeks, put it in a money market fund and earn interest that keeps you ahead of inflation. Another option is a...9/n

fixed deposit account or your SACCO. Unlike MMF which requires 2 working days for withdrawals, a fixed deposit account has a penalty for withdrawing before maturity and most SACCO need two months notice for withdrawal. 10/n

13. Best to borrow from your SACCO than 10/n

withdrawing because you deposits earn interest that makes the interest you are paying super low. Essentially 2% per annum and even less if you pay up your loan faster than the provided term. Take only reducing balance loans meaning the interest per month falls as you pay up..11/n

14. Once you have stocked up your savings, it's time to invest. One approach is buying treasury bonds. The return was 14.399% on last infrastructure bond issued. Highest return outside owning a business. You need 100K at least for an infrastructure bond 12/n

15. You are investing so as to grow, double, triple, quadruple what you save so that it can cover 30 years of retirement

16. Back to SACCOs. I feel strongly that you should not guarantee anyone's loan. But... 13/n

the true is you do need others to lend you money from time to time in order to accelerate the growth of your wealth and take advantage of opportunities. So join your SACCO with 5-10 others. Agree to guarantee each other no more than 10-20% of individual savings. That way... 14/n

each person carries only a small share of the risk. A keep it at one guaranteed loan at a time. Ask for evidence of repayment of loans and of savings every month. Strictly cut out people who are not moving at the level of the group. Go as far as having a group contract. 15/n

17. Note that everyone at the SACCO buys a share of the SACCO to join. So, every year, you earn dividends (part of the profits) as an part owner and interest on deposits that you are lending to other people. Find out if your SACCO pays out dividends or reinvest them.... 16/n

If it pays out dividends, buy more, much more than the required share capital. Why? This year, Stima SACCO, which is not collapsing btw, just having issues with its systems, paid out 11% interest on deposit and 15% dividends on share capital... 17/n

That's higher than even the infrastructure bond return. The cons: when you wants to get out of the SACCO, you may not find anyone who wants to buy your shares unless it is a massive SACCO. I don't think any is traded on the NSE either so a member would have to buy you out... 18/n

19. Here is a likely controversial one: marriage and relationships can be disastrous to your financial well-being. Be careful who you tie yourself to. Do they meet your drive? Are they keen on savings and investment or do they go for unjustified high risk returns or 19/n

do they hope that they will make it by luck and prayers? How do they spend? Do they have debt and how are they handling? Do they talk money frankly? Basically match your style or find someone complementary. Money conflict can ruin your marriage/love life.

19. Only give the person you are in-love with as much money as you are willing to lose. Gift it and forget it. Loans between lovers, wueeeh. Let your boy/girlfriend's parents support their dreams. Especially when you are young and have not achieved your own goals. 21/n

Partners/family are usually the worst kind of investment so don't turn them one. Give and forget. Or don't give at all. Utalia machozi nono nono. Go as far as setting a "donation" limit. If X crossed that limit, close your vault on them. 22/n

If X says it's a loan they are asking from you and does not repay on time, close that vault. As a habit, I pay back my mum when I borrow expressly (as opposed to her gifting me). I pay interest to my bro and cousins. I am training myself in good habits... 23/n

and strict respect of other people's cash. Lastly, if you borrow family, please be sure to lend them when they ask. Two way street. Otherwise you lose that trust. Doesn't matter is they are better off than you. Their money is not your money. Heshimu pesa ya watu... 24/n

20. Back to marriage. Please have "us money" and "me money". My expenses/our expenses. My savings/our savings. My investment/our investments. Why? Because if all your money is tangled up, and one of you makes a financial mistake, the other cannot hold up... 25/n

the family in the meantime. I am not saying hide you cash from your partner. Be transparent and as separate as possible while working on some key thing together. If your partner is not keen on savings and investments, my experience is that they will make you lose stamina... 26/n

And if you have married the wrong person already? Not to worry. Dig a chasm (a valley of the shadow of death) between your "me money" and them. It's what it is. Your goal should be to spread your risk as a family... 27/n

21. Books I have read that could be of use to you (or not since some of this authors have turned out to have weird political leanings. I read some of this stuff at 16-19 and it's helped over the years):

1. Simple Path to Wealth (he is big on stocks... 28/n

and does not believe in diversification across investment instruments but has really made me interest in the stock exchange)
2. Losing my Virginity by Richard Branson (weirdo of late)
3. The Richest Man in Babylon
4. Who Moved My Cheese?... 29/n

5. Tough Times Don't Last But Tough People Do
6. Rich Dad Poor Dad by Robert Kiyosaki (iffy. He co wrote a book with Trump)
7. What Colour is Your Parachute (career guidance that we will return to when we talk about increasing income)...30/n

8. Emotional Intelligence by Daniel Goleman

23. If you have Neflix, drop everything, and I mean everything, and watch "Get Smart With Money". Now. Do it. It's one episode long and the best use of your time today. I promise you. Thank me later... 31/n

24. There are no guarantees. Even if you are very carefully, you will make some bad financial decisions along the way. Cry a little. Get back on track. Who in Nairobi has not lost money in multi-level marketing? Remind me to tell you about that time I got myself... 32/n

into something involving Forever Living products. Watu wa GNLD mko? And that's not the only way I have lost money, friends. Happens. Learn from your mistakes, be wiser.

25. And if you walk smack into debt? First, accept that you are in debt and the only solution... 33/n

is to pay up. The biggest mistake we make with debt is to hide from it or try to ignore it. Face it squarely. Second, establish how much you owe. Approach your creditor and understand just home much you have to pay and in what time. Check if there is any chance of...34/n

some debt forgiveness. Third, agree on a payment plan with tour creditor. Plan to stick to it like glue. Fourth, tighten your belt. Immediately shrink your spending to the bare minimum. Move out if that high rent house or rent a small place and put your place... 35/n

up for higher rent. Cut out your fav, delicious food and eating out. Walk if that is what it takes. Reduce your expenses to ensure you have money. If you are in a job loss situation, get you ass up and take any job you can find to make sure something is coming in everyday. 36/n

Let the job that fits your skills and self image find you on the way. Treat debt like the worst possible thing you could have on you. Fifth, if you have multiple debts, pay the most money back for the largest one first and something for the others. ...37/n

When you finish the big debt, allocate the amount you have been paying for the big debt to the next biggest debt e.t.c. When you are done with all debt, 80% of the money you have been allocating to debt repayment should go to your savings...38/n

Expand your spending by only that 20%.

26. You need to balance between living today (kurudishia mwili asante), big life purchases (dowry, house, car, furniture, school fees, curtains 🤣...) and retirement (which can come well before 40)...39/n

I recommend a 30/40/30 division of your income...

To be continued

To be continued