WHY I STOPED LENDING MY FRIENDS MONEY

Article Written and Researched by Zack Mwema….zaxmwema@gmail.com

About five years ago, I learned the most important lesson about money and particularly debt management. I did not learn it through getting a list of money management tips or prudent debt management principles from Google or from any book, but I learned the lessons practically.  Handling money is by no means an easy job. Money brings unto its possessor responsibility and a changed position with his fellow men. It brings fear lest he lose it or it be tricked away from him. It brings a feeling of power and ability to do well. Likewise, it brings opportunities whereby a man’s very good intentions may bring him into difficulties.  I was working in the small Rift Valley town of Molo and I was also serving as Assistant Secretary of my local ACK , St Albans Church Parish. My duty in church also meant that I could be entrusted with Church money especially on a temporary basis. At one particular time, I was holding Kshs 10,000 which was a contribution for one of the Church’s projects. A friend of my father ( and by extension my friend ) called me, he runs a small manufacturing company in Nairobi and had run out of cash to complete a lucrative tender he had won. He only needed Kshs 10,000 and once he had completed the process of manufacturing the goods, he would deliver them and be paid in full. He promised me that he will pay me back within one week. Being the good person that I am, I obliged and lent him the Church money that was in my custody.

Come the following week, he had not paid me, two weeks passed and no payment was forthcoming. I went out of my way and borrowed money and refunded the Church’s money. My friend never refunded the money even after two months and this action had set me on a vicious cycle of debt. I now had to borrow again to repay the friend I had borrowed. Later on, after I was debt free, I began considering the consequences of my action and lots of questions lingered in my mind ; why did I have to lend him the money , worse still, why did I have to lend money that did not belong to me ? Must I help all the people who come to me and if yes, why do they have to transfer their burdens to me?  From this day on, I began to read books, articles and blogs that talk about principles of proper money management .Perhaps you have found yourself in similar circumstances, a friend or relative coming to you to borrow money; you then go out of your way to lend him or her savings which you have worked diligently to accumulate and have only remained in your bank account because of your extra efforts to instill a savings discipline and culture into yourself. After much convincing, you bow to the pressure and decide to just help them - for the last time. Two months later, you are hit by a financial issue, the friend never honored their part of the bargain and here you are; being pressed by a financial need that must be sorted right now. You know realize that what you did was to transfer the burdens from that person unto yourself. So what do you do in such a case? In my bid to understand the principles of prudent money management, I stumbled upon this story in George S Clason’s book, the Richest Man in Babylon and I think it best describes the blunders most of us make in our daily walk with money. Here goes the story which I have paraphrased for ease of understanding.

 There was a farmer, who could understand what the animals which he kept in his farm said to each other,  One evening he did hear the ox moaning to the ass the hardness of his lot: 'I do labor pulling the plow from morning until night. No matter how hot the day or how tired my legs, or how the bow doth chafe my neck, still must I work. But you are a creature of leisure. You are trapped with a colorful blanket and do nothing more than carry our master about where he wishes to go. When he goes nowhere you do rest and eat the green grass all the day.' "Now the ass, in spite of his vicious heels, was a goodly fellow and sympathized with the ox.’My good friend,' he replied, 'you do work very hard and I would help ease your lot. Therefore, will I tell you how you may have a day of rest? In the morning when the slave comes to fetch you to the plow, lie upon the ground and bellow much that he may say you are sick and cannot work.' "So the ox took the advice of the ass and the next morning the slave returned to the farmer and told him the ox was sick and could not pull the plow.” 'Then,' said the farmer, ‘hitch the ass to the plow for the plowing must go on.' "All that day the ass, who had only intended to help his friend, found himself compelled to do the ox's task. When night came and he was released from the plow his heart was bitter and his legs were weary and his neck was sore where the bow had chafed it. “The farmer lingered in the barnyard to listen. "The ox began first. 'You are my good friend. Because of your wise advice I have enjoyed a day off " 'And ,’ retorted the ass, 'am like many another simple-hearted one who starts to help a friend and ends up by doing his task for him. Hereafter you draw your own plow, for I did hear the master tell the slave to send for the butcher were you sick again. 1 wish he would, for you are a lazy fellow.' Thereafter they spoke to each other no more—this ended their friendship.

Can you tell the moral to this tale" : If you desire to help thy friend, do so in a way that will not bring thy friend's burdens upon thyself."

I have heard one of my close friends tell me; I don’t lend my friends money; that’s a sure way of losing both.  And I can’t agree more. Finally, I learned the hard way that even when it comes to helping my friends, relatives or colleagues, I will never do it in such a way that my actions will transfer their burdens to me. My experiences have taught me that most people forget as soon as you help them. Learn from the Ass and be responsible with your financial actions.

 Kindly visit my Blog; www.smartmoneymanagers.blogspot.com or my Face book page Stars Of the Future and lets share our experiences about money as we march towards improving our money management skills.

MAKE THE MOST OF YOUR WEALTH ACCUMULATION PHASE

Story By PATRICK WAMEYO, Daily Nation, Money Columnist

In “Business is the largest source of cash for investment” we concluded that young people looking for financial freedom must consider investing during the “accumulation phase” in their lifetime because it offers the most returns for every shilling.

We are all born babies, and roughly go through four career phases namely — school and college (navigation) stage that ends in the early-twenties, career establishment period that starts in the early twenties to mid-thirties (age 35), the mid-later career phase that starts at around age 35 and ends after age 60.

Career establishment phase which starts at about 22 years in Kenya, also sets in the wealth accumulation period in financial planning. While this career phase begins at the first employment or engagement in other money making activities, it gives way to mid-career phase at around age 35. Wealth accumulation phase starts concurrently but stretches to the age 45 of years, before giving way to wealth consolidation phase in late 40s.

Children of both the wealthy and poor go through these intertwined phases in life together, the difference, however, emerges from what they do with their time and money.

Children who were socialised in wealthy ways graduate into young adults who are naturally money-savvy — they save and borrow to invest from the first pay slip. Their counterparts brought up in poor ways have to first catch up with a life of goodies for many years until they get a rude awakening from growing bills as their purchasing power shrinks since they have been living in a series of financial mistakes.

By this time, they have lost approximately 15 years of their career — earning money from salary only, focusing on expanding it as their spending and family size grows. Regrettably, they have also lost the most valuable investment time frame in their life.

If you take a look at your classmates, you will notice that most of them were born and socialised in poor families. Does it appear normal that everybody else seems to borrow money to buy consumer goods like cars when they do not have investments?

For such people, investment actions taken after wealth accumulation phase, may not be adequate to produce as much returns both in quantities and timespan to meet the needs of the ageing adult during his/her late career, principally because of investing inexperience, and besides, other priorities demanding their money.

— Patrick Wameyo is a financial literacy educator and coach. Email: coach@financialacademy.co.ke

WHAT THE JEWS TEACH THEIR CHILDREN ABOUT MONEY

Story by Zack Mwema,

The Jews are one of the smart money managers and wealth creators that we have in the world. You have often heard that whatever a Jew touches, it prospers, simply put, they have the Midas touch. I have read a lot of books that teach on how to manage your money wisely or how to get out of debt. I have also read widely about Christian perspectives on money management, but it is this simple yet practical approach from the Jews that captured my attention and imagination. Its about what the Jews teach their children about money.

The Jews start teaching their children about money as soon as they know how to talk, they fully understand the biblical principle that says, ‘Teach a child the way of the Lord and when he will grow, he will not depart from it’ so they teach their children about money when they are young and this is part and parcel of their culture. Children have a teachable spirit; they are good listeners and are excited about learning new things.

To train their children about wise money management, the Jews will use five jars, each jar is carefully labeled and has an opening at the top; the jar is a keen to what in modern times we call a piggy bank or simply a home bank. The jars are labeled, TITHE, GIVING & OFFERING, SAVING, INVESTING and SPENDING. Every time a child is given 10 Shekels (Israeli Currency), the child is expected to put one Shekel in the Jar labeled TITHE, another Shekel in the GIVING & OFFERING jar, another Shekel in the SAVINGS jar, two Shekels in the INVESTING jar and the last SPENDING jar receives the remaining five Shekels. The child is then expected to open the GIVING jar only on Sundays, while the TITHE jar is opened on month ends. The SAVINGS jar is opened only on special occasions like when the family faces sicknesses, while the INVESTING jar is opened only when it’s full. The child takes full charge in deciding when and where to invest the money pool he/she has accumulated. The parent doesn’t intervene, even when the child is making a mistake, they let them learn from their failures. After all, failure is a good teacher. This way, their children learn to become creative in decision making and most of all take responsibility for their own decisions.

Research done has shown that the most difficult part in our lives is dealing with money. When you get this part right, all other areas in our lives are relatively easy to deal with.  Jewish children then grow with a high sense of responsibility and experience more satisfaction and success than there other peers.  For instance, the divorce rate in Jewish American families is 90 % less than the rates experienced in contemporary American families. Even as many Americans and Europeans struggle with Credit card debt, the Jews, who by the way are scattered all over the world continue to thrive in their businesses and personal finances.

So what happens for you and me who were not Lucky enough to have undergone these transformative lessons in our early lives? First, make deliberate plans to train your children; this is one of the best investments you can ever make to your children. Secondly, have a trainable attitude and begin the steps however old you are. It may seem to be a crazy idea, but it’s worth giving a trial. It may even be more fun when you do it separately but simultaneously with your children.  You can even choose to ignore the lessons and continue with your normal routine, but ten years from now, we will be able to see the results. The simple diagram below simply captures in a nutshell what the whole concept is all about.

In conclusion, King Solomon the wise said in Proverbs 22.2 “The Rich and the poor have this in common; The Lord is the maker of them all “You may be struggling with debt right now, your business may be down, your promotion may be overdue, but you have all what it takes to rise out of your current predicaments and enjoy  a life of unlimited Success. Visit my Facebook page, Stars of the Future and interact with other like minded people who believe that they have the seeds within them to cause a turn around in their finances and lives. You can also follow this link, http://www.smartmoneymanagers.blogspot.com to access my Blog and see other exciting articles about wise money management.