Coronanomics Lessons

 Lessons learnt from the Covid-19 pandemic: A Compilation of Questions and Answers

During the Corona period, things have changed necessitating drastic changes in budgeting, expenditure and wealth creation.

#1. Have an emergency fund

It should cover 3-6 months. The problem many people have is that they don't write a budget and know where to spend their money. 

#2.Have more than one source of income

Don't depend on one source. Create multiple streams of income supplementing the active income.

Q. Where can you save your money?

Your money should be saved where it is in liquid/cash form for easy accessibility e.g. fixed deposit, savings deposit. If you put it in an asset, that is investment, you may not access your money during an emergency. You can save in call accounts, Sacco where it can be used to determine your borrowing ability.

#3. Managing debt

Go for a loan for investment purposes not consumption. Never take a loan not meant for an income generating project. Beware debt kills. Some things regarded as absolute necessity are not so important to go for a loan. 

Ways of earning income

i. Starting a business 

ii. Earning passive income through dividends, capital gains, bonuses, annuities, interest from bonds etc.

iii. Buying equipment that are hired at a fee e.g. for construction 

#4. Use the 50/20/30 rule

50% of your total income should be spent on needs, 20% on savings and 30% on wants. Some needs may be wants e.g. some designer clothes or classic phone. 

The rule makes it easy to create an emergency fund, save and invest to get additional income.

The rule contains everything. Young people should live from paycheck to paycheck. Saccos come in handy through saving deposits via check off. Review your savings as your salary increases. New employees can save more. 

Young people and new employees can save more. But they lack mentors, waste their time and money because of their company. Have sessions with your mentor who has already achieved what you aspire. The younger you are the more you should save.

N.B. If you're 1-5 years into employment, you should spend time with elders/mentors.

Q. How can you save when life has become difficult?

We can live a simple life. It is possible to live with less. We have learnt that we can survive without some things you don't have need like drinking, watching football etc. 

Quote. "If you buy things you don't need,  you will sell things you need." If you buy an expensive car you may fail to pay fees for your children. 

Q. How can you create balance between service delivery and business when creating multiple income as an employee?

Multiple income is done through various ways. You can invest your money where you can earn passive income e.g. rental houses, write books, educating people on certain matters, government securities, unit trusts etc. 

#5. Learn to be budget

It is good to write a spending plan to know where your money goes. Some people are known to be generous when they have money. You can save on areas you spend more like on fare, entertianment or rent.

Quote. "If you can't tell me where your Kshs. 500 goes even I give you Kshs. 1,000 or Kshs. 10,000 you won't account for it." The only language that money talks is "bye".

#6. Associate with people who are financially literate

You need to ditch the poverty support group. Your net worth is an average of your 3-5 friends you associate with.

Q. How can you help somebody who can't write down?

Try to write down. You can use your smartphone or note book.

#7. Write a Will

It is good for a normal human being to write a will to show how to allocate your financial affairs and assets. 

Q. Is it possible as a first born to save money?

 Yes it is. When you are first, it means you are responsible and can handle many tasks of providing for your siblings and parents. You should not forget yourself in the name of educating your siblings. You can budget and ensure you pay yourself first then cater for the needs of others.

Q. When are we supposed to budget before or after earning?

The rule of the thumb is you budget before you recieve the money failure to which you will worry where the money went after spending on items not planned for.

Q. Find time to talk about the the kind of business one can do at this time

Business means offering a solution to a problem you're seeing at your vicinity. Go ahead and solve it. 

Q. Where do loans fall under the 50/20/30?

A good loan is able to pay itself. It shouldn't fall under the rule. Money from investments should fall under your primary income you use to create more. 

Q. How can we help our Gusii people whose major business is to educate children as their retirement package?

You should have a retirement plan. Educating children is good but they cannot be relied upon for they too will become adults leading independent  lives. Think of the future when you won't be strong and healthy. 

Q. I bought land at Kshs.300k 10 years ago and now I want to sell it at Kshs. 2M. What dvice can you give  me?

It depends on the development on the land, the location and availability of social amenities like water, schools, main road, power, market centre etc.

Q. How can you balance the need to help people?

You help where you can. A budget should show how much you set aside or donate to charity.

Q. How can somebody earning 10k do saving, invest and cater for his family?

Challenge yourself and look for ways of earning more. Adjust and live within your means. 

Q. Suggest a book one read about money.

1. Everything Budgeting Book

2. The Richest Man in Babylon

3. Smart Money Woman

4. Think and Grow Rich

5. The Secrets of Millionaire Mind.

In short, the lessons learnt are legion. They include: creating an emergency fund, having multiole sources of income, never take a loan for conumption instead of generating income, use the 50/20/30 rule and follow it strictly, learn to budget, associate with financially literate people and write a will. 

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