I got into this crazy discussion with a friend of mine in Tanzania recently. From the onset, I had not intended this conversion will go down this stream but it did. My gist was to understand why there is a perception that Tanzania is not fully and 100% committed to the implementation of integration measures to forming the East African Community. For those who know Dar well, you can imagine walking from Ubungo to Kariokor, it is about 8 Km, quite a distance but we never felt it because of the animated discussion.
One hot point of discussion was that “we” Kenyans lack priorities. My friend Msabaha went ahead to demonstrate this in funding priorities. He said that particularly in Dar Es Salam, if a man decides to have another woman, he ensures the wife is comfortable. The family is respected and as the man plans where to spend his income, it is clear that the comfort of the original family is very seriously considered. This, Msabaha considered a funding or spending priority, which in his observation Kenyans lack.
Funding priorities is a key component for success in any financial setting, personal or business. In personal finance, the ability to live within ones means is highly emphasized. But how do you really do so in times like this when peer influence seems to determine the car we drive, the estate we live in, the place we shop at and even the gym we visit? An exercise I participated in recently brings out this phenomenon clearly. A wise spender would make a list of what they spend their income on today. Then they would determine going forward, where to put more resources. Common sense dictates that basic human needs like education, food, shelter, clothing and water should take the highest portion of the budget, whether in saving for the future or expensing now.
Similarly, in the business world, it is possible to set out funding priorities. Think about it, a business is like a bucket with holes all over. There has to be a balance between what comes in, the income and what goes out, the expenses. If the expenses exceed the income, we have a loss, and the reverse gives a business owner the reason to smile due to profits. Beyond just spending is the rule of prudence that demands that funding priorities be observed. Consider a manufacturing business. If the proprietor takes no keen interest in controlling wage bills and ends up hiring highly experienced but expensive workforce instead of putting the funds into streamlining production processes, then there is a problem. I call this negative funding interference.
A lot of people do not consider setting out funding priorities as an important issue in financial management. Here are tips especially for those already lost in wrong priorities.
List your expenses
Listen, it is not foolish to take a piece of paper and put down where you spend your money. In fact, a recent forum I attended required us, as a means of encouraging financial freedom, to carry around a small booklet and scribble every expense, including when you buy cakes for the youngest kid at the nearby supermarket. Think about it, how would you know where you are losing money if you don’t know where it goes in the first place?
Set it out
This is a process. It includes checking where leakage happens, using funds for the wrong things, but also agreeing with self what are the most important things that should consume the biggest part of the budgetary allocation. This is now setting funding priorities.
As I headed back to the airport, I wondered whether Msabaha is just a skeptical fellow, or truly Kenyans in their peculiar habits have lost their priorities even in family finance. Share your opinion with me in the comments below.
