Personal Finance

Break bad spending traits for true financial freedom

shop

A woman shops at a supermarket in Nairobi. FILE PHOTO | NMG

When you critically look at the income you earn you realise that you are a victim of a law known as Parkinson’s Law.

The actual law states ““work expands so as to fill the time available for its completion”. It can easily be varied to mean that your expense always increase to the new income level.

This is a very scary statement indeed, just to know there is a natural law that awaits to consume every additional shilling that comes your way. More often than not you will find individuals earning a high income, but still spending considerably more than they are earning.

You most likely have regular services that you must pay for on a monthly or daily basis like mobile phone bills, Pay TV, home internet, gym membership among others.

As Kenyans, we have embraced these amenities as critical elements in our lives and think we cannot live without. Some few years back, we only watched one television channel, yet life moved on. Currently, you will find a household paying for more than 100 TV channels most of which they do not watch.

I am sure you will agree with me that some of these amenities are optional just as – forgive me for shocking you- virtually all your expenses. Let us look at a few examples. Health club membership is optional, in the sense that you can have an exercise programme outside the health club by taking a walk in your estate.

Entertainment that takes a large chunk of your expenses is also optional. If you keep a record of what you call entertainment, you will regret why you spent such amount of money.

A mobile phone is optional too. Have you ever calculated how much money you spend on your mobile phone? What about telephone? I know a professor who insists on using the land line. If you want to get in touch with him, you call the land line and leave a message. He will get back to you.

Clothes. Just look at your wardrobe and you will definitely count the number of clothes not worn for the last one month. The simple question then is why did you spend money on all these clothes? Food – yes some food you consume is optional.

Are you getting the point now? Almost everything you spend money on is optional. So, do not get into the habit of saying I’ve got to get that, I have to do that, I have to get here!

Steve Covey says that the “must have or must do” mentality is one of self-imprisonment.

You need to be very specific on what you really need. Unfortunately, people do not realise that good spending habits are just as important to your financial success as saving money or getting rid of your debt.

Embracing smart spending habits, contributes to reaching your financial goals faster. You have spent so much money on that item for so long that you fear how you would survive without it. Stop spending money on things that in the bigger picture really do not matter. Change the paradigm of your thinking and you will be out of it.

Of course, there are some expenses that you cannot change easily such as a house or a car, but most of other expenses are more flexible than you think. Not realising this leads you into debt.

READ: Financial freedom comes to those who save religiously

Not because of your income but because of your attitude. Unless your attitude about money changes, then changes or increases in income will not matter anyway.

What I may have explained above is quite simple to understand but it does not mean that it is easy to adopt. This is from personal experience. I have had to monitor every expenditure not because I am a miser as some would look at it, but in a bid to make sense as to my expenditures.

Money is really hard to come by, as well as easy to lose. I have to keep a tab to ensure it is being used in the most resourceful manner.

I believe that life will not always be like this forever. If you can give up materialism for a few years, reduce your needs for now, one day you will be able to exceed your current lifestyle and be able to achieve all your money goals. All it takes is a little effort each day for many days.

Kennedy Monyoncho is Director at- Enwealth Financial Services Limited