Road to financial freedom: How to have money to last you lifetime

A hawker sells pieces of sugarcane to a customer in a moving vehicle at the Lights stage in Mombasa County on Friday, January 28, 2022. [Kelvin Karani, Standard]

One way of ensuring you live a fulfilled life is attaining financial freedom. To some, financial freedom may mean having that well-paying dream job that guarantees a good pension when one turns 60; to others, it is having so much money that you no longer worry about money.

To Rose Ellah Ngari, an investment consultant and chief executive officer of Vasili Africa, an investment consultancy firm, financial freedom means waking up on a Monday and deciding not to go to the office but drive to the golf court. It also means going for shopping and not checking the prices and not being in debt. So how can one attain financial freedom? Here are tips and tidbits from Ngari on how you can attain financial freedom through employment, side hustle, investment, income and social capital.

Employment

Many people think that one cannot attain financial freedom through employment. Ngari believes one can. Employment, she notes, is one of the various ways of getting an income ‘and nobody should ever lie to you that entrepreneurship is the ‘it’.

“It is not the ‘it’,” she says.

“Sometimes, you get there yes, you may have the time, but you can become a slave of so many things.”

You can attain financial freedom when employed. You just have to figure out ‘what are my expenses, what am I earning, and can I be able to live within my means?’

The ultimate goal in financial freedom is living within your means. It is about reducing your debts, monitoring your expenditures every coin that comes in and goes out and making money work for you. When you get your money, save first before you start spending. If you get any extra income, save. Savings should be 10 per cent of your income. The money should be saved in an account you can withdraw but not easily accessible.

“If you save it in an account you can easily withdraw, it can be tempting. This is what we women do: we walk around, we see a pair of shoes and we want and as long as it (money) is accessible to you, you are able to withdraw,” says Ngari.

Always before you spend that money on impulse buying ask yourself: “Can I put the same amount of money or maybe even two times what I am going to spend today on this purchase in an investment account?”

“If I am spending Sh5,000; can I be able to put Sh5,000 in an investment account?”

That way, you can get hold of your impulse purchases very fast and as long you are working with a budget you are able to know this item is not within (my budget) this month, so it is not an immediate need,” Ngari explains. If it is an immediate need, then it is better to plan for it the following month. That way, says Ngari, you will achieve your financial freedom very fast.

Strike a balance with your side hustle.

A side hustle can also propel one to attaining financial freedom. Side hustle means one is still in employment but are running a business or have another job entirely. Ngari says it is possible to have both: employment and side hustle.

“However you have to strike a balance between your side hustle and employment,” she says. 

“Side hustle and entrepreneurship can take a toll on your mental health. You need to know how you are balancing your time between your employment and side hustle.”

It also depends how demanding either of them is. For example, you can employ someone to run your side hustle or even do it online.

“There are people who now run rent a shelf in town and they do the marketing and delivery for you and all you have to do is take their orders,” she explains.

Rent a shelf mode of selling allows manufacturers or owners of goods to have them displayed in a rented shelf owned by another business, sold and stocked while they concentrate either on producing more goods or on their core jobs if they are employed.

Ngari says if one is doing consultancy services on the side, they can do it during their free time ‘only if it is not affecting your employment contract’.

“But you have to know that there are some sacrifices to be made. If you cannot do it (side hustle) yourself get someone to do it. If your friend is running the same business get into an agreement or give them money or buy shares into their business or company,” she advises.

Investment

Ngari says the investment is one sure way that will get you out of paycheck to paycheck lifestyle. Or being a paycheck away from poverty.

It is not enough to save. Invest. And invest wisely. Keeping money in a fixed account with little returns is not enough.

“Even if you are risk averse, invest in a product that guarantees you (not only) the principal amount but (also) gives you a good return that you can compound may be yearly or monthly. Things like money market fund,” she says.

Income vs liabilities

Having higher self-worth does not equate to similar net worth.

“Some of us have larger than life personalities but we probably live way beyond what we have,” says Ngari.

It is better you seek net worth, a positive net worth, which will allow you to get credit. Seek to have bigger income than your liabilities or if possible have zero liabilities.

“That way you can move mountains. You can achieve not just financial freedom but you can decide to become a philanthropist,” says Ngari.

Social capital

This is where the saying ‘if you want to go fast, go alone but if you want to go far, go together’ applies.

Ngari says when running a business or in employment always make sure you keep up with your peers and people who are above you.

“I am reading a book called ‘never eat alone. It is basically about distributing your knowledge to everybody.”

Here is an example; if you are a consultant but your area of specialisation is not insurance, and you have a client in need of that service, you recommend a friend whom you know is good at insurance for them (client) to get the service.

“If the client is happy of course they will give us more business,” says Ngari. This way, everything you know around your network will translate into your bank account.

As you move up the career, Ngari says, you should not only keep your network but also cut off those who you do not need.

“Some bridges need to be burned,” she says.

Have good mentors who will carry you through the journey to financial freedom, she says. These are the people who will later on mention your name in a room you are not in.