TheStoryOfMoney

Abundance Mentality as opposed to a Scarcity Mentality

noreply@blogger.com (Unknown) — Fri, 10 May 2013 01:21:00 -0700

For most of us we live in a society where we always want more and believe that what we have is not enough to get us to where we want to be in our finances, career and generally life. There is nothing wrong in wanting more; in any case it is a good thing to want more in life. It acts as a driving force to get us to the next step.

What hinders us is the mentality that what we have is not enough to get us to next step. We tell ourselves when I get a salary increment or a bigger job I will buy myself a house or I will go back to school.

Guess what when we get the salary increment which we do every year we have no idea what happens to the money and we set the goals for the following year and the cycle goes on. And of course nothing changes in our lives. (‘Rat race’ Concept as explained by Robert Kiyosaki in his book RICH DAD POOR DAD)

The reason for the lack of growth is that we tend to have a scarcity mentality as opposed to an abundance mentality when it comes to life and especially money and we believe that what we have is not enough or good enough for our dreams and financial purposes.

You know Rome was not built in one day and the same applies to wealth creation. We need to build it over a period of time.

In his book the “The 7 habits of highly effective people” Steve Covey coined the idea of abundance mentality or abundance mindset, a concept in which a person believes there are enough resources and success for themselves and to share with others.

He contrasts it with the scarcity mindset (i.e., destructive and unnecessary competition), which is founded on the idea that, if someone else wins or is successful in a situation, that means you lose; not considering the possibility of all parties winning (in some way or another) in a given situation.

Abundance Mentality	Scarcity Mentality
Peace, Comfort	Fear, anxiety, desperation
There are always new chances and opportunities	You have only got one shot
Positivity, Growth	Utter failure just because you stumbled once

With a scarcity mentality you keep waiting for that opportunity of unspecified amount at an undefined time to come your way. Some people wait all their lives. As opposed to an abundance mentality which allows you to plan, invest and see every opportunity as a means to achieving your financial goal.

How to get rid of a scarcity mentality

Focus on what you have and not what you lack. Your thoughts form your words which form your actions which result in your habits, behaviour, culture and we all know how the cycle goes. Whatever you focus on is what you will see in your world.
Appreciate what you have
Get organized financially
Hang out with people who have an abundance mentality. Look for like minded positive people
Get rid of the sources of negative vibe in your life. This may mean avoiding some people who always have negative vibe
Create win-win situations and collaborate with others especially when it comes to investments
Learn from your investment mistakes and move on

When it comes to money there are several healthy habits that can be adopted that can help change ones view of money

1. Budget what you have and live within your means

2. Track all your expenses on a daily basis including the Kes 20 you gave the guy on the street.

This seems like a very tedious process but let us look at what it costs not to do it. Assuming you cannot account for Kes 100 in a day, in a 30 day month that adds up to Kes 3000 that you cannot account for, in a year it is Kes 36000. Now imagine what you can do with that Kes 36000……… I hope now you understand why you need to track every penny.

3. Where possible do bulk shopping as opposed to buying an item when it is over. When you buy in bulk you can save upto Kes 100 per item. (One day do window shopping of the items that you buy monthly and see)

4. Avoid buying things from the local kiosk. Most of the time we run to the kiosk to do emergency shopping. Guess what Kiosk prices are 20-50 bob more than supermarket.

5. Get rid of unnecessary expenses

6. In your budget include rewards. You work hard every month allocate a portion of your salary to spend on yourself on anything that you want. If you allocate the funds you will not feel guilty spending the money. After all why work hard if you cant enjoy yourself. It can be as little as Kes 500.

7. For those who believe in God. As a way of saying thank you to him for seeing you through the month give tithe, help someone in the society. Anything as an act of worship.

In the end if you work with what you have you will be surprised how much you have and how much you can produce from it.

TAKE A STEP BACK AND CELEBRATE YOURSELF TODAY

How To Ensure Your Children Are Financially Literate Part 5

noreply@blogger.com (Unknown) — Sat, 8 Oct 2011 06:31:00 -0700

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The final and last principle which can be very helpful if properly applied.

5. Investment Or Work

Our children can be very talented individuals. They could capitalize on these talents and use them for greater good.

Let us take for example Musicians or Actors. They make lots and lots of money out of their talents. We even idolize them.

If your child is artistic. Example exposing their talents to you as their parent, your friends and relatives. The list of things they can do with such a talent is endless examples like art, computer skills, singing, dancing......

Encourage Artistic Kids

As you develop their talents they may find themselves earning something out of it. This is normally an easy option if the child enjoy's what they are doing and does it exceptionally well.

With this method, care needs to be taken so that the child does not lose focus on their academics or "burn out".

Or alternatively if they do not use their talents encourage the older kids who have finished formal education to look for part time jobs including volunteering, apprenticeships and working for free to learn a skill.

Creativity Pays

The point in this case is to ensure that they understand the value of money and how to make it work for them.

With a little help the child can be a master of money.

See More of Dee Musinguzi at The Fine Art Of Dining

Why It Pays To Save Money

noreply@blogger.com (Unknown) — Fri, 30 Sep 2011 17:04:00 -0700

Saving money or economising is like a foreign culture for most of us. We naturally tend to consume and spend spend spend most of the time.

Why is it that we find it difficulty or impossible to save? after-all "how can we save when we have bills that need to be paid".

Let's first look at "HOW we should save" before we tackle "WHY we should save".

It can be somewhat difficult to save money at the beginning but with time and practice it soon becomes a habit. A good habit.

The ideal principle to apply when saving is to always try to save 10% of our wages - with a future plan to have at least 6 months equivalent of our income in a savings account as a base.

When trying to save, it's advisable to have a separate account from your normal current account. The savings account should be one that has pays YOU interest (however small), have no charges, and also no withdrawals.

Why Save?

Leave Those Coins In The Piggy Bank.

There are several reasons why it make's sense to save.

· Saving to improve our lifestyle

We save so that we can have the ability to purchase products that we normally cannot afford to buy.

If for example, you wanted to upgrade your TV. To get motivated for example- I associate that with a healthy lunch, which most of the times is usually cheaper or have a light packed lunch just to save money.

Another example would be to saving to attend a lifetime event. This would be the world cup for example. A dream come true for most. Not only would you be able to afford go on holiday, but you when have savings, then the more chance, you usually have of affording it.

Holiday !

· Saving As A Means Of Freedom

Having money stashed away, will give's you the chance to make life changing decisions without the worry of how will you survive depending on how much you have saved. If you have some money stashed away you can survive and pay your bills?. Some good savers are known to take unpaid leave, just to have a break from work and are still be able to survive and pay their bills comfortably.

Savings As A Means To Harness Opportunity

Money saved will give you the option to take advantage of opportunities we would never be able to have under normal circumstances. Example, those lovely pair of shoes you saw in the shop on your lunch break.

Or sometimes, friends come up with an investment ideas or saving money opportunities that need quick cash injections. Savings by all means is a cheaper source of funds as compared to loans. ( Always keep your eyes open for easy cash opportunities sometimes they turn out to be really good opportunities - example bulk buying opportunities in the office may save you money, and also be mindful as sometimes it turns out to be a con ).

Saving For An Emergency Fund

In case of an emergencies saved money ALWAYS comes in handy. It could save your life.

Prepare For Your 18 Year Old's Call This Year.....

Save For Retirement

Most of us, would like the opportunity to retire early. How do we ensure that we are not working into our old ages? Saving is a good option. Its recommended to invest in a pension fund.

As we approach old age we also approach self actualization or basically we have done what we always wanted to do in life in whatever capacities.

A Break From The Rat Race

Its 's such a good feeling to have that peace of mind that the bills will always get paid even when pushed to the extremes. Or even be able to afford to go on a cruise holiday!.

Damaris Musinguzi is the Author of 5 things your children should learn about money. She also runs an online business utensils-r-us which is one of the first in Kenya.

How to ensure your children are financially literate Part 1

Simple explanation of Debt Ceiling

Why it Pays to Invest in Gold

Tips To Save Money When Shopping

noreply@blogger.com (Unknown) — Sun, 25 Sep 2011 13:23:00 -0700

Its important to live within our means and still enjoy life. Life should not be a drag because economic times are hard. There are several easy things that can be adopted that may have a positive impact on our spending behaviours.

Bargain Shopping

Bargain Shopping Helps

Always look for products that are on sale. Let us say you save 5/= per item then on five items, that would be a saving of 25/=. For every shopping trip you will find that you have saved quite a lot of money.

Shop In Stores That Have Coupons & Redeemable Points Systems

Points and coupons can be converted to items later on in the month, year etc. Imagine the feeling of going shopping and not paying for something because you could redeem your points.

Shop In Bulk

Example Monthly Bulk Shopping Is Good Idea

Smaller quantity items are priced higher than for the same items but in a larger quantity. Some of the bigger the items have a lower price point. When you purchase these huge items and to avoid wastage, sub divide them into smaller usable quantities and store the rest.

This also reduces the frequency of shopping trips and saves money and time.

And the biggest advantage is that, you would still be eligible for discounts on bulk items.

Avoid Brand Names

It's possible to find items of the same quality from other companies other than branded names. Brand names most of the time will command a higher price point. After realising why you use a certain produc, it's advisable to look for cheaper products of the same quality.

Example Your Work-Shop Or Gardening Clothes

#Example# You may be using a certain expensive brand of soap because of the aroma whilst you may find a cheaper alternatives elsewhere.

Use A Shopping List

Also always use a shopping list to avoid buying items you already have and to discourage impulse buying.

Try To Avoid Fuel Marts, Local Shops

Some local shops and fuel marts will buy their goods at Supermarket and Mega mart and sometimes their goods can be highly priced.

Why not just go to the supermarket yourself? After all you have planned to do a bulk shopping.

Dont Go Shopping Hungry (Eat before you shop)

You End Up Buying Snacks While You Shop

It will discourage unnecessary shopping. When you are hungry you try to satisfy your hunger by impulse buying.

Window Shop

Window shopping allows you to compare prices. As much as it may be convenient to shop for everything in one store it may not always be cheaper. Grouping your purchases can help. Shop groceries at the most affordable place, meat products together etc

Damaris Musinguzi is the Author of 10 things your children should learn about money. She also runs an online business Utensils r us which is one of the first in Kenya.

How to ensure your children are financially literate Part 1

Simple explanation of Debt Ceiling

Why it Pays to Invest in Gold

How To Ensure Your Children Are Financially Literate: Part 4

noreply@blogger.com (Unknown) — Sat, 24 Sep 2011 17:02:00 -0700

Having looked at the 3 principles

1 Accounting for you allowances
2 To get money you need to work for it
3. The principle of saving

Let us look at the fourth principle

4. 4. The Loan principle

Sometimes a loan makes sense. Sometimes we need to teach our children valuable lessons - so instead of paying for an item, you give them a loan to buy the item.

For example if an item is on a low offer and it will only make sense to buy it now.

When They Find Huge Savings Off Things They Want

Once the loan is disbursed then the payments can take two formats

*Give the full allowance in full and get paid a predetermined amount back. The child can chose to pay more than the predetermined amount but never less

*Give the allowance having deducted the monthly repayment

Some Offers Make Sense

Allow the discussion to be mutual. It will enhance understanding.

At the very least repaying the loan should show them the link between their lifestyle and expenditure. They will in future understand not to borrow money unnecessarily.

As the loan is being repaid any monthly obligations should not be stopped monthly eg saving should not stop.

The loan principle should be applied just as the banks do so as to enhance understanding.

How To Ensure Your Children Are Financially Literate: Part 3

noreply@blogger.com (Unknown) — Fri, 23 Sep 2011 12:51:00 -0700

Having looked at

Principle 1. Accounting for your allowance

Principle 2. To get money you need to earn it.

Let us look at the third principle

3. The principle of Saving

It is good to keep money for a rainy day or to buy something that we really want. A good principle is to save at least 10% of your income. (If you can save more than 10% the better).

The idea is to be consistent.

Every Little Helps

For every income that is received a portion should be placed in the savings.The money saved should not be used to buy stuff just for mere gratification.

As much as the money in the saving is separate from that which is used every day the child needs to also be accountable.

They need to keep a log of

*how much they have saved.

*any drawings that have been done on the savings account

The Coins Add Up For Kids Treats

Example

If your child wants an item that costs say 1000, they could save 200 - five times or 100- ten times.

The point in this case would be to know the target amount and how long it will take to get there.

You will be surprised the number of creative ways the child will come up with to get to the target amount faster.

Just ensure that the child understands what the point of saving is.

How To Ensure Your Children Are Financially Literate Part 1

Simple Explanation Of Debt Ceiling

Why It Pays To Invest In Gold

Damaris Musinguzi is the Author of 10 things your children should learn about money. She also runs an online business Utensils r us which is one of the first in Kenya.

How To Ensure Your Children Are Financially Literate: Part 2

noreply@blogger.com (Unknown) — Wed, 21 Sep 2011 10:29:00 -0700

Having looked at How To Account For Money let us look at Principle 2

2. To get money you need to work for it

Most children of generation X and Y parents believe that money either comes from the wallet or the wall (ATM). The concept of working for money eludes them.

We need to change this mentality as it is causing a lot of rot in the next generation.

This does not eliminate the need to give the children any allowances if we can afford it.

Where to start?

There are certain household chores that we normally pay people to do. How about we pay our children to do the same?


Pay Children To DO Some Chores.

For example if you normally get someone to mow the lawn or wash the car , how about you get your children to do the same for a fee. This can be introduced when they ask for any extra money or it can be a way to earn the weekly allowance.

As a note this does not eliminate the fact that we need to teach our children basic household chores. Those should continue to be there and they should not be paid for the same. Example washing the dishes, cleaning the room.

As you are giving them the work explain to them why they have to do the same. In the same vain let them know what your expectations are. If they don’t meet the expectations they will not get paid. They will grow up to be people of integrity.

At this point you can be creative about the chores.

Example Watering Flowers is a Kids Delight.

Once they appreciate doing chores and earning they will see the value of money.

How to ensure your children are financially literate Part 1

Simple explanation of Debt Ceiling

Why it Pays to Invest in Gold

Damaris Musinguzi is the Author of 10 things your children should learn about money. She also runs an online business Utensils r us which is one of the first in Kenya.

How To Ensure Your Children Are Financially Literate Part 1 Of 5

noreply@blogger.com (Unknown) — Tue, 20 Sep 2011 10:08:00 -0700

How early should we teach our children about money? I am no financial expert but my guess is as soon as you can. Soon begins when you give them money to go to the shop, when you start to give them an allowance.

They need to understand what money is and that it has a value.

Severally principles can easily be applied

Accounting for you allowances
To get money you need to work for it
The principle of saving
The Loan principle
Investment or work

When you read the autobiographies of the world richest men you will find that they started to be interested in money from an early age. Our aim here is to educate our children so that they can get out of the rat race. And yes this could well be the stepping stone to the building their empire.

At 13 years Bill Gates had used his talent and created a software program. He is the founder of Microsoft and current Chairman of Microsoft. (ref Wikipedia)

Richard Branson’s first successful business venture was at the age of 16. He ran a magazine called the STUDENT. (ref Wikipedia)

As a child Warren Buffet displayed an interest in making money. He went door to door selling chewing gum, coca cola and weekly magazine. (ref Wikipedia)

The list goes and on but it drives the point home.

Let us look at each principle in more details

Accounting for your allowances

As we give our children allowances we need to teach them to be accountable for the same. An allowance sometimes is the first encounter that we have with money. How we treat that same could form the foundation of how our children will handle money as they grow older.

Let us just take a simple accountability template. The same can be discussed weekly or as frequent as the allowance is given

Week 1	source	Money In	Money out
Day 1	Allowance	100.00
Day 2	Savings		10.00
Day 3	Community		13.00
Day 4	Juice		14.00
Day 5	Transport		11.00
Day 6
Day 7
		100.00	48.00
Balance		52.00

Week 2	source	Money In	Money out
Day 1	Balance for week 1	52.00
	Allowance	100.00
Day 2	Savings		10.00
Day 3	Community		13.00
Day 4	Juice		14.00
Day 5	Transport		11.00
Day 6
Day 7
		152.00	48.00
Balance	104.00

The template is easily adaptable in an excel format or even handwritten in a handheld notebook.

This will reduce the opportunity to misuse the money as they will have to discuss have they have spent any money given.

These discussions can be opportunities to give advice on how else the child can spend his/her money.

With time this becomes a habit and the discussions can be eliminated altogether.

How to ensure your children are financially literate Part 2

Why it Pays to Invest in Gold

Simple Expalnation of Debt Ceiling

Simple Guide to Late Payments

Damaris Musinguzi is the Author of 10 things your children should learn about money. She also runs an online business Utensils r us which is one of the first in Kenya.