Small Wins

Yet again you are feeling frustrated. For the last year or so you have been preparing personal budgets and all this time you have not lived up to your set financials. Well, not to worry! Most people experience this but will not appreciate and accept the fact that they are failing in this area.
 Are you extravagant? Are your budgets unrealistic? Is it that your earnings aren’t enough? Are your social hours with friends a waste of resources? How can you maintain your bank balances on the rise and not on the decrease? How can you develop your budget skills? What percentage of your salary must be spent on “what”? Should I purchase a piece of land in the village or purchase a commercial house in a trading centre? These are the questions we often ask our selves. Again it’s up to the individual; I know for the fact that if you can’t properly plan for the little you earn, you won’t be in position to manage any increase in earnings. Start now with what you have. Set personal goals and review your domestic and personal expenditures, how much are you committed to set aside as your savings? You will be surprised to note that not very many people set plans and make personal budgets today in that bracket of the enlightened folks! Let alone stick to them! Do you tithe a tenth of your earnings? If not you might want to reconsider. Most rich people religious or not tithe in their local church. Do you ever wonder why? So you have reviewed your personal expenditures, do they make sense? Are your expenses necessary? Why do I say that because some expenses we incur really contribute little to our personal growth. Take for example, your social hours with friends how is it of significance to you? How is it building you? Most people claim that these hours are of benefit to them because they get “job contacts”, share general economic and political issues? Well, how is it that you continue in debt? I feel disheartened most often than not when I see able bodied men and women on political rallies in the morning and on a week day not working but listening to a politician with a score to settle with his rival over personal matters and not matters related to national issues. Is that economics or politics?  For sure this is economics because all I derive is that politicians are determined to maintain our people in poverty. Then there are these individuals who take time calling in on talk shows and/or send greetings to their loved ones who happen to be sited right next to them! How absurd! Well you might say these are small expenditures on transport, refreshments and airtime respectively. How do you recover them? Who finances them? Have you considered computing how much you spend monthly or annually? It’s a challenge really to maintain our bank balances on the increase most especially because our demands exceed our earnings. But the secret here is to maintain a small petty cash for anticipated domestic expenditures on a savings account and look out options on savings that serve the same purpose but require minimum withdrawals and with maximum returns that will grow our personal wealth. Personal wealth is simply your monies net of debt. I have previously hinted on African Alliance unit trusts that require minimum investments of as little as UGX 50,000. Other alternatives are Shelter savings accounts that do not require you to withdraw until after a 2 years period. There are many other products out there that you might want to consider. Land is the in thing in
Uganda today, in my opinion returns on land are long term and if you are looking at making yourself better in the short run you need to reconsider. It is even not advisable to purchase land now if its upcountry except if you want to pursue commercial farming. Most people in the developed world are investing in pieces of paper. Pieces of paper are financial assets or securities sold by a company to obtain the necessary money to carry on business. These pieces of paper have value because they are claims on the firm’s real assets. Financial assets include not only shares of stock but also bonds, bank loans, lease obligations and so on. Most of these assets are now available on the Ugandan market. The matter of how much to spend on what really depends on the individual and only you can answer this. Once you have decided on what expenses are necessary and which ones are not. How much you want to save from your earnings then draw a monthly plan and budget and compute the figures annually. Congratulations you now have a budget for the year 2007! Review this plan monthly and adjust accordingly depending on the circumstances. Purpose to stick to it! Once you know what you want to achieve and how you want to achieve it, it is easy to discover were you went wrong when the time comes. Best wishes!  Arthur Kaliisahttp://kammassociates.comesatradehub.com

The year that is! 2007 is now a reality and you have probably already decided on your goals for the year. We wish it was that easy, resolutions without financial implications. The good news is that yet again you have to make important decisions this year to better yourself and grow your value. The secret to good management is to increase value. That is a simple statement, but not a very helpful one. It is like advising a saver on good money management to “set aside a little, all the time.” The problem is how to do it.
 There may be a few activities which one can read a text and then “do it”, but good money management is not one of them. It involves a lot in terms of experience, creativity, judgment, and a pinch of luck? Good money management is a discipline you develop gradually as you progress. And of course it comes with a few hiccups here and there. Purpose this year to learn something new in this area, the basic principle here is “a shilling to day is better than a shilling tomorrow” as the guru’s put it simply. This is so because money today is available for immediate investment and/or savings. Start with what you have at your disposal set a side a certain percentage say 10% of your earnings monthly as savings. Be creative; do not put all your eggs in one basket. Besides having an account with a commercial bank, look out alternatives that will make your money grow and require minimum investment. For example unit trusts which cater for the small time investor of as little as UGX 50,000. The fees charged in the African Alliance Money Fund for example are 0.5% on the entire fund and not on individual investments. You will be hard pressed to find a commercial bank with such favorable rates. The ease and flexibility in the fund or liquidating or redeeming units is another factor that should be considered. Again I need to stress that “a safe shilling is worth more than a risky one”. You are able to withdraw part or all your money from the fund without prior notice of forfeiting interest. Keep track of your investments detailing amount invested and when, interest earned to date through the statements provided on request. Many a time we loose lots of monies through bank charges, administration costs and other hidden costs because we make uninformed decisions on investments. Before you decide to make an investment into any portfolio seek the input of an investment advisor/fund manager. Their services come in handy most especially in today’s world were your uninformed decisions are somebody’s niche. Purpose to read some material on good money management and get to it yourself or how else will you learn how the investment and savings game is played? Most of what you will do has already been documented by the “investment gurus”. Do not try to experiment something new because this concerns your livelihood and you don’t want to mess with your finances. Consider reaping benefits in the long term and not in the short term! Congratulations upon reaching the New Year! May it be a prosperous one! Arthur Kaliisahttp://kammassociates.comesatradehub.com

Work hard and learn to save! Friday, 29th December, 2006

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Letter of the day

SIR — The year has come to a close and we are obliged to take stock of our activities in 2006 and plan for 2007. This has been a year of challenges filled with tight cash flow problems as we tried to make ends meet and leading acceptable lifestyles.

Could it be that our expenses were not prioritised and/or we spent on items not planned for? Could it be that we were living beyond our means? Were our sources limited by design or do we continue to blame the government for its monetary policies that are driven towards reducing disposable incomes among its population?

Will “bona bagaggawale” be achieved in 2007 as the government wants to make us believe? What do we need to do as citizens of this country to change our livelihood. Where are the answers to the widespread poverty?

How do the choices we make as individuals affect the environment? Unfortunately, education today has increasingly become part of the problem and not the solution. Much of our education is centred on good grades which we think means better jobs.

There is therefore little emphasis on hands-on approach and job creation. The general feeling is there is no capital and even where there is it is evident that this will never be enough to start an income-generating scheme. The usual suspect takes the blame — the government is not doing enough to create jobs!

I do not know where opinion leaders and government officials get the claim that they can do away with poverty completely. However, there is hope that it can be controlled. Our focus should be on trying to enlighten the population on good financial management practices however small our incomes are. Is it true that if you can’t manage small amounts at your disposal you can’t manage larger amounts?

A friend of mine once made a general observation: “Ugandans would like to live and shop like whites but do not want to work like them.” what does this mean? Our spending patterns exceed our incomes.

Most “investors” I have been in contact with have confirmed that there is brisk business in Uganda.

Although I agree to some extent that government involvement at this stage is paramount, the individual is key to achieving this.

Financial managers propose that once an entity receives money that is unaccounted or unbudgeted for it becomes a problem and might lead to financial disparities. We all need to be informed that to improve our lives we shouldn’t expect gifts but work hard and strive to develop good financial discipline through savings and improved spending habits.

Happy New Year!

Arthur Kaliisa
arthurkal@yahoo.co.uk