“Experience is what you get when you didn't get what you wanted. And experience is often the most valuable thing you have to offer.” – Randy Pausch

Experience is the best teacher and at most times we tend to learn from the financial mistakes or achievements of others. This brings me to the question:

What financial lessons do people learn from you? Are you the type of person who spends money faster than you earn it? Do people look up to you and are willingly ready to invest with you or are you the type of person we are warned to avoid when it comes to making financial dealings with? Are you the type of person who is constantly in debt due to your failure to effectively manage your finances or are you the type of person we all turn to when financial times are tough?

My current financial state has to a great extent been shaped from my interactions with others. I strive to avoid those financial pitfalls my predecessors have experienced while at the same time I try to emulate the financial character of my mentors. Life is all about learning lessons, which lessons are others learning from you?

Can you really afford that?

Being realistic about what you can afford is hard to live by daily, many have failed to understand what it means to have a lifestyle that their salary can support without living pay cheque to pay cheque or having to choose between either having money to buy breakfast over fuelling your car in the morning. This remind's me of a Nigerian movie I watched some time back about this poor guy who wanted a GSM mobile phone, he really wanted to fit in and was ready to go to great lengths to get the phone, so he decided to pull his daughter out of school to raise the money to buy the GSM phone.

I am usually fascinated by this friend of mine who fuels his car with KSh 200 every evening so that his car can ferry him to and from work every day. It is evident that the car is a liability cause he constantly has to make routine visits to the garage on most weekends An hour with him won’t go by without him cry of being broke, if only he was wise enough to sell it off and use the public means of transport like the rest of us.

Saving is a priority, not an afterthought

Majority of people don’t prioritize on savings or for that matter, an emergency fund. The unexpected is bound to happen eventually, will it find you ready? Early this year a friend of mine suffered an acute heart attack, he has a good job working as a sells' person with one of the major electric appliances companies in Kenya. To everyone’s surprise he had nothing to settle the hospital bill with, I recall being called while I was in Mombasa to M-Pesa him some money to help in paying for his treatment. From his experience I learned to allocate a certain percentage straight from my pay cheque to my savings, and to prioritize having an emergency fund.

Deal with Debt, Now.

When we get into debt we don’t often prioritize paying it off and in turn end up costing ourselves thousands of shillings in interest. Most debts are unavoidable but being saddled with debt shouldn't be a fact of life. Dealing with debt as quickly as possible is the strategy we should always take. I have an uncle who works with the Kenya Ports Authority, you can imagine how well he is paid plus the benefits he enjoys, though it is sad say that he is in sever debt with not only his bank but the small “chama’s” he borrowed from. He never prioritized on settling those debts and he recently received a letter from his bank threatening to report his him to the Credit Reference bureaus, plus this cannot go without mentioning that most of his properties are being auctioned.

It is best to ask

For what you didn't learn in school, ask. My primary school teacher always used to tell us, “There are no stupid questions.” What he should have added is that not asking questions could cost us money. The reason as to why my uncle took all those loans, and was unable to pay them, was to invest in a matatu business. He failed to research on how to effectively manage his matatu and in the long run the business became more of a liability than a source of income. It got to an extent where he was forced to start using his own income to support the business. Applied knowledge is power, for all the financial actions you plan to take, do your research. It is not worth it to be taught; or worse, learn the hard way. Ask.

At the end of the day others will always be watching. The achievers will be emulated while the under achievers will be used as a reference point for failure, yet still we can learn from the financial mistakes made by others and find ways of avoiding a repetition.

“Accept what life offers you and try to drink from every cup. All wines should be tested; some should only be sipped, but with others, drink the whole bottle.” – Paulo Coelho