Financial experts tells us wealth is more about attitude and sound habits than external conditions such as inheritance, good income or an enabling wealth-creation environment.
Experts further argue that even if the entire world’s wealth was redistributed equally, it would be back in the hands of the 10 per cent within seven years.
This is attributed to certain lifestyles that determine whether one accumulates wealth or not.
A recent report, The Kenya Integrated Household Budget Survey (KIHBS) found that 20 per cent of Nairobi and Mombasa residents own 86.4 per cent and 78.2 per cent of the wealth, respectively.
In Nairobi, the survey found that 40 per cent of residents at the bottom of the income pyramid control a mere 0.4 per cent of total expenditure, a figure that rises to 2.7 per cent for 60 per cent of the population.
Whenever the emotive issue of wealth gap or unequal distribution of wealth is raised, blame and accusations are traded to condemn, justify or explain the situation.
Although there are certain factors that undeniably widen the gap, in most cases the disparity has more to do with individual’s habits and attitudes than external factors.
Globally, it is estimated that about 90 per cent of the wealth is in the hands of 10 per cent of the population.
This skewed distribution of wealth is mostly erroneously attributed to uneven distribution of resources that produce wealth as well as one’s background, social connections and environment.
It is also blamed on the government failure to create employment, good economic policies and curb corruption that gives undeserving people opportunity to loot and amass wealth.
Other external factors include historical and bestowed privileges. For example it is believed that the rich, progeny of rich people as well as those living in rich countries with better pay and better environment for wealth creation will continue to be richer.
This is not actually the case. Financial experts tells us wealth is more about attitude and sound habits than external conditions such as inheritance, good income or an enabling wealth-creation environment.
Although these factors help, they rarely determine the net outcome. Experts further argue that even if the entire world’s wealth was redistributed equally, it would be back in the hands of the 10 per cent within seven years.
This is attributed to certain lifestyles that determine whether one accumulates wealth or not.
In terms of financial lifestyle, people fall into three classes: Those who spend above their income, those who spend everything they earn and those who spend less than they earn. This makes a whole difference in the medium and long-term. It is only those who spend less than they earn and invest who accumulate wealth.
Take for example the issue of Safaricom #ticker:SCOM initial Public Offer IPO of 2008. Ten years ago Kenyans literally queued to buy a stake in one of the largest IPO in history.
They were thirsty of creating wealth. It was massively oversubscribed by 532 per cent. All individuals who applied got at least 200 shares each. They were equalised. What about today? We have individuals who own hundreds of thousands shares and majority of those who had 200 to start with, instead of getting better, they have zero today.
They sold especially when the share price plummeted temporarily.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
