- If you put aside just sh1000, at the end of the year you should have sh1100 not sh1000.
- Today, make a point of talking to your financial advisor for advice on how to manage your finances, irrespective of how much you make.
If you were born after 1997, move closer and gather here. I’ve got a story for you.
My father’s generation made mistakes. They were the men and women who got into the work market around the time Kenyan gained self-rule from the British.
Not many indigenous people were educated then, but there were lots of opportunities for the few who had some education, however, limited.
It was a clash of cultures for many of them, shifting from a traditional mixed economy characterized by subsistence agriculture and barter trade to a modern economy where people exchanged goods and services for money.
It took time for our people to understand money and the essence of saving and investment. It was all good until retirement checked in.
It does check in sooner than we think. That is when they realized they were ill-equipped to face retirement. The resilient ones took up other jobs and businesses in their local communities but most of them fell into depression and loneliness as they entered the sunset years.
My generation was lucky, and we had our fathers to thank for it. We witnessed the pain of walking into retirement broke, with nothing to hold onto. Many of us got into the workplace determined to change the narrative.
We took up a culture of diligently saving a portion of our income, took loans to build or purchase homes, and moonlit to enhance our income streams.
We have not all got it right, but I can say with confidence that we are better versions of our parents, at least as far as retirement planning is concerned.
Now, on to you Zoomers. The oldest of you have been adults for just eight years. Those who had the opportunity to pursue higher education are just getting into the work market.
The workplace you know now is not the same workplace I joined twenty or so years ago. When I started work, many organizations still had the typewriter.
Personal computers were rare. Only a select few owned mobile phones because the cost of the gadget was way beyond the reach of many. And then the revolution happened! Computers flooded the office, cyber cafes and even homes.
Thousands lost their jobs as they were replaced by the computer. Those adept at using the computer were hired. The price of mobile phones fell drastically and suddenly the masses could afford them.
The pager technology, that held so much promise, fizzled out. Postal Corporation, which once thrived as the primary medium of sending letters, started to struggle as people communicated more by way of phones.
The illustration above demonstrates the fluid nature of the workplace as we know it. Things can change very fast, and the change can sweep anyone with it. There are two lessons here for you Zoomers. The first is that you need to continuously invest in yourself.
Never stop learning new skills, especially those you are passionate about. The skill you have today may become irrelevant tomorrow, and the newly acquired skill might be what keeps you in the workplace.
The second lesson, which is probably the most important, is the need to prepare for retirement right from day one, with your first salary.
Know that whether you retire at 65 due to age or get into forced retirement at 40 due to changes in the workplace, the critical factor is in the preparation.
So, how do I prepare for retirement, you ask?
The answer to that seems straightforward but it is not. Many would argue that young people should save a portion of their money and then take a loan against their savings to purchase a property.
This is good and is certainly better than nothing at all. But the critical success factor is in ensuring that your money grows.
You need to aspire to reach a position where you can take a break from work and not be worried at all because your money has and continues to grow. In other words, if you put aside just sh1000, at the end of the year you should have sh1100 not sh1000.
Today many solutions are available that allow you to start setting aside even as little as sh100 here and there, increase and decrease the amount as you wish when you come across extra cash. Plus they even allow you to easily withdraw. But try not to because otherwise how will your money grow.
I hope I still have your attention, guys. Sometimes I forget and become too verbose. Allow me to say one last thing. Or maybe two.
As Kenyans, we love to invest in land, and it is not bad because the value of land appreciates over time. However, young people should remember that cash is king.
When you are in a financial emergency, you may not get a buyer for your land and if you do, they may take advantage of your desperation and offer a below-market-value price. I strongly recommend a mixed portfolio including immovable assets such as land and cash.
Today, make a point of talking to your financial advisor for advice on how to manage your finances, irrespective of how much you make.
Insurance companies and fund managers not only have in their employ highly qualified financial advisors, but they also have the expertise to profitably manage your money while you continue to work and grow in your career.
Yes, 15 to 20 years from today, you will be glad you made certain choices.
The writer is CEO and principal officer, Britam Life Assurance Company