The one thing that makes Kenyans make that leap of faith, and dive into the challenges of diaspora life, is MONEY. Money, money, money, isn’t money the thing that drives us most into the daily decisions we make in life? Money can be like a relationship, (I know!…as if we do not have enough relationships to balance already), if you treat money right, it will treat you right too. If you do not take of it, show it some love, be dedicated to it, you and money can kiss that relationship goodbye. From there on, its disaster after disaster, problem after problem, issue after issue.
In the quest for the ultimate ‘dream’, there are various sacrifices that the diaspora do, there are various things that one does to make sure that they make as much money as is possible. However, just like with everything else in life, not everything is ever meant to be smooth sailing all the way. Life is full of ‘kupandas and kushukas’. Some of the hurdles we face in life are things that are beyond your control, but sometimes….sometimes….those hurdles that we face are actually our own fault. Like I said, sometimes.
So what are the common money mistakes that the diaspora makes? Here is my run down.
1.) LIVING BEYOND YOUR MEANS:
Being a diasporan, comes with a certain image, an image of success, an image of money. It’s an image that creates a lot of stress for many as they try to live up to it. There are many who are living beyond their means due to easy access of credit. They have gone overboard with financing their big screen tvs, living room furniture, bed sets etc. The only problem is that, for all these things, one will need to make the necessary payments for you to have them. So you find that someone spends all their time working on the second or third jobs, just to maintain the high lifestyle. It is important to live within what you make. It sure leads to a stress free life if you do so.
2.) NOT UNDERSTANDING THAT A CAR PAYMENT AFFECTS YOUR OTHER FINANCIAL GOALS:
When we embark on the process of car purchase, the major cost, that is in our minds is the monthly payment. We all subconsciously think only about being able to afford the monthly payment on the car. We make the mistake of just doing a mental calculation, and say, “if they give me this car for $200 I will go home with it”, we rationalize the thought by doing a mental calculation of what the largest hit your paycheck can take, and if you are fine with that hit, you proceed to get that car.
As you start making the payments, you realize that there is more to the car than just the monthly payment. There are other costs, which you did not consider when making your mental calculation. These costs are:
i) Monthly car payment
ii) Monthly insurance payment
iii) Monthly gas (petrol) consumption
iv) Monthly maintenance costs.
When you add all these costs up, you find out that your paycheck is getting a larger hit than what you thought of at first. While you may still be able to afford your car, even after adding up all the costs, other projects and financial goals that you had might have to be put on hold, or you might not be able to commit as much money as you thought, just because you entered into a decision to buy a car.
3) NOT UNDERSTANDING THE IMPORTANCE OF A GOOD CREDIT SCORE:
The truth is, most of us do not even know what a credit score is, especially not within our first year of diaspora life. We come from a country that has a simple financial life. Things like credit are the preserve of the rich. In Kenya, its simple, you either have it or you don’t have it. Credit is available to those who have, not to the poor. So here you are in a foreign country, trying very hard to adjust to a new culture, trying very hard to set up a foundation in this new life, some bills start to pile up, you get a credit card offer which your gladly accept, you realize you need a car therefore you go to the dealership and get a new car, then there are more bills, but the income is not rising as fast, so you delay making some payments here and there, or you decide not to make the payments for a while.
So there are these guys who work for organizations like experian, equifax and transunion who are busy tracking your every financial move and they will note when you stop the payments or delay the payments. They start to find that you are a little bit untrustworthy with the money you have been lent and will write that on their reports, and down goes your credit score!
By the time you are settled in in your diaspora life, and your are now ready to do some serious projects, and you need bank loans, or mortgages or car loans, you are not successful. All you applications are denied because you have a bad credit score. Such is life!
4) NOT HAVING A BUDGET:
Budgeting is not a fun thing to do! Nobody loves figures! The truth is though, it is a necessary “evil”. It is important to take time off your busy schedule to write down what you make, and calculate your expenses, while factoring in your financial goals. Most in the diaspora, however, engage in a lot of impulse buying. Most of the shopping we do is done on impulse. A good example is the many times that we go into a mall, just to see what is out there or just to stretch our your legs. 5 hours later, you have bags and bags of shopping that you had not planned on buying.
It is important to make a budget, to plan your financial life, and when you do so, you will be able to achieve a lot more, as you will have better control of your financial life.
Check out the video below on 4 common money mistakes that the diaspora makes.