How to transform your financial status

By scrutinising my expenses, I realised that my priorities were upside down and that my spending decisions were not aligned to what I said was important.

I read a report on the banking industry and how the industry is not big on innovation.
The reason for this appears to be the delicate balance between the need for convenience and the obligation to ensure safety of customer‘s funds. An interesting fact I stumbled upon in this report is that prior to the Mobile Money revolution, the banking industry had only one major innovation in almost 30 years the Automated Teller Machine (ATM).

Does anyone recall life before the ATM? I vividly remember the nightmare of queuing in the banking hall to withdraw or deposit money. Since I was not yet part of the working class at the time, my involvement in banking was very basic, holding a place in the long winding queue while my mother ran errands in town.

I absolutely hated standing in the line, anxiously waiting for mummy to return in time to do the actual banking.
Banks closed at 3pm and never opened over the weekend, which meant that one had to be well-organised in planning their weekend expenditure as you would not have access to your money till Monday.

Then the ATM was invented and it revolutionised our lives as we now had 247 access to our money. As with all new things we experienced many unintended consequences of having unlimited access to our money which is a subject for another day.

What we thought was a life-changing innovation has now paled in light of the Mobile Money revolution.
The ability to move money around to settle one’s financial obligations using your mobile phone from the comfort of your home or car is transformation and has gone a long way in enhancing financial inclusion for the unbanked population in Uganda and East Africa.

Here is my point. It did not take very many ideas or innovations in the financial services sector to dramatically transform our lives. Just like only two innovations in the financial services, the ATM and Mobile Money have greatly impacted us we do not need very many ideas to change our lives or our financial status.

I have had the privilege of interacting with customers from diverse industries and sectors. One thing is clear from these interactions customers who have tried to venture into everything have seen significantly less success than those who have concentrated on a few related lines of business.

This concept of concentrating on a few key initiatives not only holds true for personal finance, it is the key to financial security. We do not need many ideas to achieve financial security and independence. What we need is one or two well-executed ideas or initiatives to totally transform our lives.

I like the famous quote by Thomas Edison, the inventor of the light bulb and the father of modern day electricity “The difference between me and other men is that other men think about many things all day I think about one thing all day.”

Little wonder that Thomas Edison went on to invent electricity after more than 4,000 botched attempts. I began the journey to financial independence when I read Robert Kiyosaki’s “Rich Dad Poor Dad” in 2003. I made three major lessons from this book and have focused on only these three things.

First, was the decision to keep track of all my expenses. Even though I have found this to be a painful, dull process, tracking my expenses has over the years revealed major flaws in my decisions and priorities.

By scrutinising my expenses, I realised that my priorities were upside down and that my spending decisions were not aligned to what I said was important.

For example at the time I read the book, my New Year resolutions for three years running had been to save 40 per cent of my income. By scrutinising my expenses I realised I was saving less than 3 per cent. I also discovered that when I was in a jolly mood, I would blow four or five months’ worth of savings in a few days thanks to impulsive expenditure.

Secondly, was the decision to get out of debt as I had fallen into the debt trap. I purposed to pay off all my debts in a period of seven years and thanks to unbroken focus, I was able to free myself in five years.
Then I had a brain wave instead of using the money that was available now that I repaid the loans, I decided to start saving the monthly loan repayment amount in an investment account.

So if at the time I was making monthly loan repayments of Shs150,000, once I repaid the loans, I did not take back that 150,000 into my regular spending income but continued deducting that from my salary and putting it an investment account.

My reasoning was that since I had survived without that money for more than five years, I could live without it.
Thirdly, I observed that I was increasing my living expenses and lifestyle with each promotion and pay rise that I received.

This was the toughest lesson to master and it called for a tremendous amount of discipline. Actually, what made this particular initiative very hard was peer pressure and the need to belong to a certain class.

As my income grew, I did not drive a better car or move to a bigger house. I did not even change my wardrobe. Instead, I saved every salary increase in an investment account. These three initiatives have transformed my finances.

The writer is Standard Chartered Bank’s head of financial markets in East Africa. E-mail: GraceTibihikirra.Makoko@

SOURCE: Daily Monitor

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