I dashed into a shop to buy whatever it is my dad had sent me to get. Upon my return he asked, "So where is the receipt?" "Oh, I forgot!" I said, annoyed with myself for I so hate to disappoint my father. "You forgot? Business people don't forget. If you forget to ask for receipts you won't make a very good business person, my girl!" I was only seven years-old. I sat in the back of the car dejected at the prospect of my pending doom as a businesswoman. You might be thinking I was made money-aware at too young an age but I'm glad I was. Bad habits form early and once a bad habit has been etched into your persona it is very hard to give up. When you are very young and impressionable you absorb and accept things much more easily. Receipts are important. That's what I learnt that day. If you start a business you'll need receipts to offset against tax but even if you are not running a business, receipts are your only barometer for how much money you are spending. Learning the Habit of Asking for Receipts I have a challenge for you to carry out over the next week. Get an envelope. Put it into your handbag and every time you buy something, ask for the receipt then make a note of what you bought on it. At the end of the week lay out your receipts and note down everything you bought and how much it cost you on paper or, even better, in a spreadsheet. I can almost guarantee that a) you will be surprised by how much you spent over the course of just one week and b) you will realise that you didn't need to buy some of the things you did. Do I always remember to ask for a receipt? Not always but 95% of the time I do and this practice has served me well. I recently started my own business and when it was time to get my annual tax return sorted out I didn't struggle to find my receipts. They were all saved in one folder and any receipt that had been received via email was already stored in a specific folder on my computer. Receipts received via email are ALWAYS immediately saved to a unique folder as a PDF in the format:YYYYMMDD {Amount} {Item}. This makes them supremely easy to find. So, for instance, the receipt for the artwork of my recently published book, "Chichewa 101", is saved as: 20120619 MWK9000 Chichewa 101 Artwork. This way, when you need to summarise your receipts in a spreadsheet you won't even have to waste time opening the PDF document because it's there in the filename. What does all this mean for your personal wealth goals? The sooner you get used to keeping receipts the better you will get at understanding what you spend your money on and the easier life will be if you one day start your own business. Running a business alongside your regular job is the best way to boost your income but you need to have business habits before you decide to start a business. "Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." - Charles Dickens
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There are only two things you can do to increase the amount of money you have: make more or spend less. This week we're concerned with spending less. A Cleaning Co-operative Everyone hires domestic workers as though it is a must. As I showed last week although their cash pay might be low, their effective cost is probably much higher due to wastage. If you don't have kids it's unlikely that you can make efficient use of a worker. Half the time there'll be nothing for them to do. To address this have you thought about forming a cleaning co-operative? Get together with three friends and share a worker. You will immediately slash the cost of domestic help by two-thirds. Not having constant support will mean you and your husband have to do more cooking and dish-washing yourselves but honestly how long does that take? I work 10 to 12 hours a day and I still manage to do all my own cooking. Two days of domestic support is sufficient to get all your cleaning, washing and ironing done. This idea is not that radical. Such an arrangement can be set up in many different ways e.g. you can have someone round daily in the morning whilst they work at someone else's house during afternoons. If you have young children that need constant attention this obviously wouldn't work but if you're single, newly married or if your kids have left home it's a great way to spend less. One of my uncles has a single domestic worker who does all the jobs: inside and out. My uncle and aunt cook their own dinner and only have a light lunch for health purposes. The worker prepares ingredients for instance by chopping tomatoes and onions but my progressive 60 year-old uncle prefers to cook himself. Shop Abroad I went to boarding school and whenever I wanted to buy imported snacks my father told me to "support home industry". I support this view if the industry exists. Telling you to shop abroad doesn't go against this advice. Malawi does not produce clothing, cosmetics of a verifiable quality or any basic cleaning agents. All these good are imported and sold at a hefty premium. So if you travel to South Africa or anywhere else once or twice a year take the opportunity to buy these things abroad to make significant savings. One of my best friends, an Economist like myself, does this and she saves a lot of money because of it. If you budget to spend a certain amount only when you travel it enforces financial discipline on you. You're less likely to shop on impulse and much more likely to think before you buy. I think it's difficult to shop for cleaning materials abroad if you travel irregularly but it can certainly work for appliances and clothing. As a child growing up my parents always bought things abroad when they had the opportunity to travel. I would never have asked them to buy something in Malawi because I was taught how much more expensive it was locally. I became cost-aware at a very young age. If you can relay the same awareness to your kids it will stave off feelings of guilt when they ask for stuff and you say no. What do you think about co-operating with friends and relatives to share workers? Do you think shopping abroad could work for you? As much as you might think you manage your money badly there is one group of people that manage it even worse: household helpers! As far as they are concerned, you have an unlimited cash supply. They probably think you have a special tap in your bedroom that you just turn on and money comes splashing out. I am willing to bet that you spend at least 1.5 to 2 times what you should due to workers wasting and mismanaging your resources. If you have kids this will be even more. Over-cooking I don't know how often my mother's cook has been told that she cooks too much but the feedback goes into one ear and out the other. There's a simple solution to this problem, weigh food out before cooking it. Weighing food is not a sign of stinginess. I cook most of my own meals. To ensure I'm not over-eating, I weigh everything. If I'm cooking grains e.g. rice, pasta, quinoa etc, I weigh out 100g for my husband and 50g for myself; for legumes e.g. beans 40-50g each is enough. Consider weighing out what needs to be cooked in this way. It's a sure fire way to eliminate wastage. If you receive unexpected guests you can always cook a little more. Persistent Overuse of Everything It's easy to observe say too much rice being cooked, but you might be surprised to find unnecessary overuse of everything else. In producing sauces, for instance, I noticed that my mother uses fewer onions and tomatoes than the worker does. She can make a great sauce with just one tomato but the cook uses two to three at a time. Just the other day I found her pouring oil into rice that had already been cooked and I reprimanded her for it. She claimed adding oil adds flavour to already cooked rice. What? This is completely not true. Cleaning Agents Two weeks ago I bought 1.5 kg of washing powder. On the same day my mother bought 1 kg and my cousin 500g. That would last me a month to six weeks but within just a couple of weeks it's been completely finished. The solution here is to ask what needs to be washed, weigh out the amount of washing powder you think is appropriate and keep the box under lock and key in your pantry. It's annoying to have to regulate everything so closely because your domestic support unit is so wasteful. However, if you want to build a decent wealth base you have to. Take care of the tambalas and the kwachas will take care of themselves. I asked my friends how they think their workers waste money and was surprised by the strength of their responses. They all mentioned the above issues and some even added that their workers waste water and electricity by leaving lights and plugs on all the time. Ultimately with our hectic lives we can't do everything ourselves and that's why we hire cooks, cleaners and gardeners. Whilst these people boost efficiency, they are also a huge financial liability and a major source of cash leakage. Rein them in. Train your workers properly, tell them what you expect and monitor how well they are taking care of your hard-earned resources. It's true that not making enough money makes it supremely difficult to make ends meet but there's an even bigger culprit than that: your emotions. Poor money management is very strongly correlated with an inability to manage one's emotions. Emotions to watch out for: The Desire to be Admired At the very top of the list is the desire to be admired. Women have this need just as much as men. How many guys with flash cars do you know? You look at the car, then look at the rented flat the guy lives in and the two are completely incompatible. As far as men are concerned, more people see their car than their home so they would rather direct their resources on purchasing a car. If your husband falls into this bracket you have to work very hard to make them see sense. They're probably the same guys that insist on purchasing electronic gadgets they can ill afford. For women grooming is the key culprit. We want to look physically appealing to ourselves and to others. Although it's much cheaper than a car there is no limit to the number of products 'with your name on them'. A poll of my friends suggests that cosmetics, hair, shoes, clothes and handbags are the key expenditures girls persistently spend on. I'll talk about how you can spend less on these items in future articles but for now, I just want to highlight the correlation between poor emotional management and poor financial management. The Pull of Instant Gratification This is the desire to satisfy our most current needs at the expense of long term gains and successes. Wanting instant satisfaction is an especially big problem in Malawi. A low life expectancy and unstable economic conditions e.g. current high inflation rates, make it even harder for us to plan and imagine a future of financial freedom. The desire to give into momentary pleasures is further driven by advertising and our constantly seeking to "keep up with the Joneses." Jealousy How often have you looked at something someone has, asked where they got it and gotten the item yourself? Laziness Do you really need to buy lunch every day? What stops you from taking a packed lunch into work? Laziness. Indeed the prospect of having to cook when you get home causes some to stop by a restaurant and purchase even their dinner. Restaurant food is expensive. Half the time we eat out it's because we're too lazy cook. Greed I'll be the first to put my hand up and admit I love food. My love for food led to my weighing a hefty 78 kg in 2010. Reining in my weight has taken a lot of discipline. Eating less also means I spend less money on food, especially restaurant food, one of my family's top monthly outgoings. Have a think about all the times you've spent money in the last month or even the last six months. How often was the expenditure planned and how often was it driven by one of the above five emotions? The last time my father gave me any money at all was ten years ago when I was 18. It was December 2002. He sent my mum with some cash when she came to visit me in university, but I asked her to tell him never to send me money again. I have hustled my way to relative financial comfort since. This is my debut article and in following articles I hope to help you take control of your money in the same way. |
For 2 years until early 2014 I wrote a weekly personal finance and business column for Malawi's leading media house, The Times Group. The target is middle-class, working African women.
This is a reproduction of the articles that appeared in the weekend edition of Malawi News. Categories
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