It's payday, you want to read this issue...
Hi Jamii Finance Reader,
Just a heads up, this issue of the newsletter is long so here’s a tl;dr:
- You want to build wealth, but are you thinking of how to preserve it?
- It’s hard to save, almost impossible even without regular income-stream, what then?
- We know it’s long, we tried to cut it down, but we think it’s all useful information and we’d like for you to get through most if not all of it :)
- No, a SparkNotes version does not exist.
- Scroll to the end for our resource of the month and information on Twitter’s new presence in Africa.
Happy reading!
Tell us a bit about yourself, what do you do? We want to understand why you’re interested in personal finance (why did you agree to be interviewed?)
My name is Justin Wanyeki. I’m a twenty-six year old Kenyan working in the finance space for the past three years. I started out my career on Wall Street in New York City, before moving to London and finally, settling in Nairobi where I currently work as an Investment Advisor with Crossboundary.[1] I started to think more about my personal finances in 2020 after the realities of the pandemic started to set in. The atmosphere of uncertainty around job security had me contemplating whether I was well-prepared to maintain my current lifestyle and cover basic expenses like housing and healthcare in the event that I got furloughed or lost my job entirely.
When Kenya went under complete lockdown, it quickly became obvious to me that I was not well set up to cope for long without a regular income-stream. I, then, set out to create a plan to mitigate any risks. First step was to examine my expenses and regulate my cash-flow[2], prioritizing only my needs. The second was to track exactly what I was earning vs spending, ensure the difference was saved, and strategize around putting my money to work, i.e., investing. Moreover, even with the excess invested, I prioritized highly liquid[3]investments so that I can easily have access to cash in case of an emergency.
I wanted to contribute to this conversation because I find that young people are afraid to ask questions and that most of the information available is from an older generation with a different set of values and priorities
There is power in hearing other young people share their experiences with others.
You are a young Kenyan setting yourself up in your life and career. What motivates you?
I am a big proponent of living and working in Africa. At the core of it, it has to do with family - I derive joy from being close to my father and brother. I also think about a future where, if I have children, I would have the ability to comfortably love, care and provide for them. More philosophically, I would like to give them the freedom to explore their interests without the pressure to decide a future based on financial constraints. Raising them in an environment where their financial future feels certain frees them up to think about solving interesting problems and pursuing their genuine passions. Looking around us, the majority of the people solving the world’s problems happen to be those unencumbered by societal pressures and expectations like going to college or taking on a traditional 9-5 job.
While I enjoy what I do and appreciate all I have learned, my career choice was definitely influenced by a direct need for financial freedom and stability. I would prefer to take that thought process away from my family and allow them to be.
What’s the best personal finance advice you have received?
The best advice I have received was to care about how to protect my wealth much in the same way I think about how to generate it. Hypothetically, if I were to fall sick and unfortunately, pass away after accumulating wealth, could my family access it? Is there a clear transition plan in place? Have I disclosed my investments to the right people? Additionally, as young people, we don’t talk about what life would look like in the aftermath of losing a legal battle or having to spend everything on healthcare. We need to talk about setting up structures which protect us from going completely under water.
Another key piece of advice I received is on the importance of investing in oneself. While saving and investing significantly improve the quality of one's life, we cannot discount the value of education, exposure and investing in friends- be it the relationship or their businesses. Instead of thinking of occasional travel or a good book as an expense, it pays to think of it as an investment in oneself. Exposure to new places, people and ideas are equally invaluable sources of wealth. Of course, the caveat is that too much of it becomes an unhealthy indulgence which could drain your finances, but overall, investing nothing in yourself is as bad as wasting all your money on material pleasures. It pays to find a healthy balance.
As a cofounder of a fintech startup, I will, from time to time, engage with different people on personal finance. With every encounter I have received one of two responses; either interest to learn more or annoyance at ‘platitudes’ like ‘spend less, save more’ etc. Why do you think this is the case?
Conversations about money are generally uncomfortable. What’s more, a lot of the money conversations have to be politically correct since certain statements could be misunderstood depending on a couple of factors: the closeness between those conversing, income brackets, culture, and more. And in all honesty, it’s so easy to tell people to save when you yourself have the excess to do it, but the reality is that a huge percentage of our society either survives on daily wages or lives paycheck-to-paycheck. In such situations, ‘save more, spend less’ becomes a platitude because it simply isn’t practical. I presume that the interest is shown mostly by peers receiving their first salaries but unsure how to manage the money.
Unfortunately, even as the economy grows, wealth will always be disproportionately distributed. As such, our conversations need to acknowledge the complexities involved in deploying capital within different income brackets and a push towards diversifying income streams to increase cash inflow for people regardless of income bracket.
It’s worth mentioning that there are real structural issues which hold back young adults working towards building wealth. High unemployment rates is one such issue. With experience in the advisory and investment space in East Africa, what insight/resources can you share with young East Africans working hard to get ahead in spite of some of these problems?
I have to start by acknowledging that I have been lucky to have both had the privilege of receiving a good education and job immediately after graduation. That being said, I hope I can share my thoughts based on my perspective in the investment space in East Africa.
I think we should look at entrepreneurship as a means to solving society’s problems and not just starting a company for its own sake. I have seen people get rewarded for solving problems or addressing the risks associated with those problems. And there are lots of problems to be solved in our region which is why we continue to see a proliferation of startups and consequently venture capital in cities like Nairobi. What’s more, many of the ideas aren’t necessarily the newest of ideas but are building upon existing solutions. It pays to think about what problems can be solved in our immediate communities. Setting up a shop, or a mobile money stall could be a source of passive income. Can you provide a service within your community? Translation services? Technology expertise?
Our generation has been cultured to think that money is exclusively made in specific industries and careers yet Gen Z[4] is showing us that money can be made in a variety of ways. All one needs to do is try.
More broadly, our economies are largely agricultural, accounting for about 30%-40% of Kenya’s revenue GDP, for instance, and >50 % of all jobs. As a young person, where can you add value? Agriculture includes production, aggregation, processing, value addition, exporting, and more. And outside of the value chain, legal and accounting services, saccos[5], and cooperatives are needed. Given that a lot of money is generated in this sector, it is worth considering even though we might not regard this as one of the sexiest income-generating activities.
Of course, technology is becoming bigger in the region as well. What problems can you solve using technology? There is lots of interest around the ways in which IT can play into the economy and everyday life. There is a jump in the required skill set but there are also lots of resources online to bridge that knowledge gap.
Finally, people and relationships are your biggest asset. Whatever path you decide to take, a lot of doors are opened through the relationships built over time and you are always one conversation away from life-changing information. Books also confer wisdom as they are a form of accumulating not just knowledge but a variety of life-perspectives. Hopefully, young people can play a role in addressing these structural issues down the line.
Resource of the Month:
Just_Ivy on Instagram hosts weekly posts on Monday focused on personal finance. This past week was a thread on wedding costs. It’s insightful! I recommend!
This past weekend, I was having a conversation with friends on ‘skilled vs unskilled’ talent and I stumbled on this article which I think is a good read. It’s worth having honest conversations around opportunity, talent and privilege.
ICYMI
Twitter is hiring for roles in Ghana.
Listen to the new Jamii Podcast!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
The Jamii Finance Team is looking to interview entrepreneurs in any field to be featured in this newsletter. If you know anyone interested in sharing their journey with us, please reach out to contactjamii@gmail.com. Thank you and have a fruitful week!
[1]“A mission driven investment firm that unlocks capital for sustainable growth and strong returns in underserved markets”
[2] ‘You wake me in my sleep definition’ - cash flowing in and out of your account. Expert definition here.
[3] ‘You wake me in my sleep definition’ - easily accessible, easily spendable. Your mobile money account is liquid. Your land investment is illiquid (need time, a broker to sell the land so you can have the money). Expert definition here.
[4] My sisters, born in 2007 and 2005 inquiring how my life was growing up in the 1900s, are part of Gen Z. Alternative definitions: TikTok millionaires, teenagers in 2021. Expert definition here.
[5] What we call ikibina in Rwanda: Perspective on why saccos are important. This is a video on Kenyan saccos, but there are some gems to be borrowed.