The art of money, wealth creation and common financial pitfalls

 

A previous bell ringing ceremony at the National Stock Exchange on November 1, 2023. [David Gichuru, Standard]

In a society where cash is king and the ends justify the means, there are people ready to do anything for money. The picture becomes even murkier in a world where parents spend a king’s ransom to educate their sons and daughters so that they can secure well-paying jobs.

While everyone has been taught and socialised about the importance of earning money, there are very few lessons and even fewer institutions that offer practical guidance on how to use money prudently and retain it.

This is where ‘‘The Art of Money and Wealth Creation’’, a book by development economist and personal finance coach, Patrick Muinde, comes in handy. It serves as a guide for anyone eager to accumulate and retain wealth without infringing on others’ rights or compromising nature, which he views as a gift from the creator.

His book functions as a practical guide, echoing the ideas of fiction writer Jeffrey Archer. In his novel ‘‘Not a Penny More, Not a Penny Less’’, Archer suggests that it is nearly impossible for a person to make and retain millions of dollars legally without breaking any laws.

By sharing personal anecdotes to illustrate his points, Dr Muinde effectively demonstrates, in straightforward language, that the world has enough resources for everyone. He argues that the only limitation to a person’s share of this wealth is their imagination.

Contrary to fears that the digital age threatens the future of many jobs, Muinde writes that too many people die without leaving anything for their descendants. But he is optimistic that the current disruptions in various sectors are a source of immense wealth.

He argues that “many of the industries driving today’s economy did not exist 25 years ago, and yet they have created the richest people in history”.

He supports his assertions with solid data, demonstrating how a mere 1.2 per cent of the world’s population controls 48 per cent of its wealth.

He further expounds that 11 per cent of the wealthiest people own 85.9 per cent of the global wealth.

Closer to home in Kenya, Muinde shows that although there were 53.83 million bank accounts as of February 2019, only 0.7 per cent of these had an average balance of Sh1 million.

By December 2021, out of 67 million bank accounts, only 1.8 million had a balance of Sh100,000. He uses these statistics to explain why millions of people in Kenya and around the world fail to realise their wealth potential.

The author’s provocative style, rendered in everyday language, breaks down complex economic jargon and principles into easy-to-understand and enjoyable content.

The book, which is about wealth creation, illustrates Muinde’s mantra that wealth creation starts in the mind.

He explains how, during the Covid 19 pandemic, he began sharing personal finance tips on his Facebook page, which eventually led to writing this book.

Motivated by the distress he witnessed in society, where people lost their jobs and were forced into destitution, Muinde draws on teachings from various sources, including the Bible and ancient texts. He even incorporates insights from ancient Babylonian wisdom, believing that no knowledge is too small to share.

Like many writers, Muinde experienced moments of discouragement, wondering whether he was qualified to write about wealth creation, given that he had not accumulated much wealth in his career. However, he believes that every human brain, powered by 86 billion neurons, has the potential to formulate ideas and solve problems for oneself and for the community.

By extension, Muinde asserts that readers can create, manage and grow wealth.

A word of caution: Although the book is fundamentally about achieving wealth, there is no silver bullet or shortcut to success. The literary world is filled with motivational books that can sometimes read like get-rich-quick schemes.
This is not what Muinde seeks to achieve.

Muinde also addresses the concept of ‘black tax’, a common pitfall for many Africans. He warns that failing to account for expenses related to extended family contributions, such as wedding dowries, graduations, and other needs, can greatly impact one’s cash flow.

He advises that failing to budget for the black tax — which can vary from month to month — can ultimately lead to a cycle of debt.

Muinde further argues that the transformation of the world into a global village has driven millions into consumerism, where people mindlessly purchase new items, believing that this translates to a better life.

Muinde guides readers on how to escape financial mediocrity and the middle-class trap, arguing that the quality of life improves when people are financially secure.

Wealthier individuals are more assertive in fighting for their rights compared to those who are financially struggling and lack the courage to demand their rights.

The author has formulated several rules, with some of the most enduring being the importance of saving, avoiding get-rich-quick schemes, and making money work for you.

He emphasises that it is sometimes easier to make money than to retain or multiply it for future generations.

He has also outlined some things that individuals aspiring to create wealth should avoid. In Kenya, for example, many families accumulate wealth but lose it after the wealth creator dies.

Muinde identifies gambling as a key addiction and a major cause of financial ruin worldwide. He argues that betting and lotteries are designed to encourage continuous play and create very slim chances of players outsmarting gambling houses.

He warns that even those who are fortunate enough to win big often end up losing their winnings.

Muinde identifies other impediments to wealth creation, such as alcohol, drug abuse, uncontrolled sexual desires, greed and outdated cultural practices.

While the book is aimed at individuals, it also offers valuable insights for governments and corporations on how they can create and retain wealth.