The Challenge of Diversion of funds

Young elephant feeding on unsold Christmas trees

It is that time of the year again when intense activities associated with Christmas beckon and soon everyone is in it. Those attractive offers on mobile phones, and never ending discounts on household items. Remember the trendy and fashionable clothing that suits you, particularly many who have to travel to their rural homes over the holidays. New arrivals for shoes and consumables that many cannot resist to fly along. Of course most firms especially retail stores maximize on this position to boost their sales before the close of the year.

First, a lot of people have regrets for missing out on all the financial resolutions they set up in the New Year. One was to save for a better and comfortable spot when it comes to a grand end year family gathering, because the last one, while enjoyable and well celebrated, you ended up borrowing to patch up in January. The second was to invest in some form of security for the future, a piece of land or some shares in a blue chip company. None of these have materialized.

But we are peculiar. We like new things. Why should you be seen by the village folks with the same dress you adorned last December during this visit? Why should you drive home the same car you did last time? In fact you would rather hire only for a number of days, maybe this time a 4WD and show what you are made of. You have progressed remember. Why should you appear with the same watch that you had last time, shoes, and the like? Remember this year, you have travelled far and wide, and picked a few items at the airports.

What we forget is that tomorrow we have school fees to pay. In fact our children have progressed to new classes where the fee is higher. The school principal has also introduced new levies in the name of school development and class tours. We forget the landlord who will demand their portion by the first week of January. We lose count of the daily bills that will not wait, food, water, electricity and communication. We forget that while we travel away from Nairobi for example, the tomato vendor has less sales and will hike prices in the New Year in the pretext of low supplies from the farm.

The biggest challenge many people face is diversion of funds. This could be for household needs that were not planned for, completely emerging. It is not just ladies who are involved in impulse buying like the myth goes, in fact the magnitude of this trait could be bigger for business people. Procuring new stocks meant for the festive season that do not move could harm the business.

The most effective way to deal with diversion of funds from purposes intended for is planning. This does not mean being rigid and not appreciating the fact that emerging needs arise. But at least an existing plan guides and helps reduce chances of great magnitudes of losing financial direction.

Secondly, save for holidays. A holiday is not an emergency according to financial experts. One can set aside small chunks of money on monthly basis and hit their target at the end of the period. Above all, always remember, the most prudent rule of finance is, spend what you have planned for.

Do you divert funds at the end of the year? Please share your experience with us in the comments below.

Zak Syengo

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Zak Syengo is the Senior Manager Marketing & Communications

at Rafiki Microfinance Bank


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