MONEY THOUGHT FOR 2024

No better time than the end of the year to assess your money situation. If you are ambitious your money situation is not satisfying at all.

Myron Golden, one of those money motivational speakers, said something in the last few days that struck a code.

“If you desire to fix your money problem, don’t try to fix the money problem, fix your money mindset …. Or your money problems will never go away,” he said.

Do you want to know if you have a money problem?

Add up all the income you made in the year and then determine the value of all the assets you own, things like cash, shares, bonds, businesses, real estate please don’t include your car, cloths and phones.

If you are in a good place your assets should be equal to or more than your age multiplied by your annual income, all divided by ten.  So, if your annual income is sh10m and you are 30 years old you should have at least sh30m in assets. If you have more than your number you are doing well, if not you need to pause and think about your life.

The formula was proposed by Thomas Stanley author of “The Millionaire next door”. It is based on a US reality so may not be directly applicable to us, but it is a good place to start.

There are more brutal formulas, like the income from your assets, passive income, should be equal to or more than your annual expenses to be able to begin to rest on your laurels.

So, if you are doing badly by the above formulae Myron Golden says the money is not the problem but your mindset.

For many of us when thinking about getting money we are like, just show me what to do and I get the money. We will be shocked to learn that it does not work like that.

To explain. There are two ways of spending money. Only two. Either you eat it or you invest it...

If you look at your finances, the balance of these spending decisions would tell an on looker immediately whether you have money problems or not.

So, if I said I will give you a sh100,000 right now, what would be your first thought on how to spend it?  For most of us we will think of food, cloths, drinks or some transient experience. There is a small minority – less than two percent of most populations, who would think first of how to invest the money.

The word invest needs to be demystified. For many of us, we equate investors with those men who are always waiting outside State House looking to get incentives and tax holidays to put up multi-million-dollar operations.

So, when asked how would we spend sh100,000, we think it is too little to invest.

This is the direct opposite of my friend Jack, when money crosses his path his first thought is how to deploy it. However, small little it is. As a result, after more than a decade of this discipline, he has built himself an asset base that is more than a billion shillings and which pays him about sh500,000 daily or sh180m a year or sh15m a month and he is not yet 50 years old yet.

Ok so he might have come upon a windfall in the last year or so, but because of his mindset, which is now wired away from eating his money, he invested it rather than blew it on fast food, fast cars, even faster women and high living.

"Mindset is key. Thoughts lead to actions, actions lead to behaviour, behaviour leads to character and character leads to destiny. But it starts with a thought.

Kampala businessman Sudhir Ruparelia in answering the Financial Times, way back in the 1990s, how he became wealthy replied, “It is an old Indian trick, earn ten shillings, eat one shilling reinvest nine shillings. Repeat until rich.”

Our knee jerk reaction is to rubbish such stories. Us we know the man has done some funny things along the way and that is why he is rich.

That may very well be, but for us it absolves us of the responsibility to try and get rich, we are convinced the rich are crooks and since we are bible slapping, church going Chiristians, we have left the wealth building for the crooks. Don’t get me going why it is convenient for some people that the gullible flock persist in this fallacy.

Crooks will be separated from the rest with the passing of time, don’t worry about that. The point is when money cross our paths the truly wealthy look at it differently from the rest of us mere mortals and that makes the difference in our fortunes or lack of thereof.

And the opportunities are all around us.

Last week investment bankers Crested Capital held a “2023 Market Round up” webinar to see what our capital markets have been doing throughout the year.

While the overall performance of our Uganda Securities Exchange (USE) was dismal, it is down 26 percent this year, the devil is in the detail.

If in January you had bought Stanbic bank shares, at the time going for sh21 each, you would make sh11.50 a share by year end. The share closed last week at sh32.50. But in addition to that Stanbic paid sh6 in dividends per share during the year.

If you had bought 1,000 shares of Stanbic at the beginning of the year for sh21,000, your interest in the bank world now be up to sh32,500. In addition, you would have earned an additional sh6,000.

You just have to extrapolate the figures to see that if you had bought 10,000 or 100,000 or a million shares you would have bagged sh60,000 or sh600,000 or sh6m respectively in dividends alone.

Looking at your annual income surely you could have committed a few shillings to buy the Stanbic share and make some money, during the year. What stopped you from doing that? Ignorance could be an allowable defence, but I am willing to bet you ate the money.