Why Are We Poor In Managing Our Finances.

Tomorrow is end month so lets talk about the most important thing that happens.....you being paid. On the issue of salary, how come many professionals are not able to manage thier finances? Professionals usually have a considerable advantage in personal finance—namely, they can budget for thier income unlike the self employed who are not assured at what will be in the bank come end month.

In theory, having an expected amount at the end of the month should make it easier for you to stay out of
debt, save more, potentially take on some calculated risks in a fairly manageable way (if desired), and generally accumulate wealth more quickly. But is that what happens?

I haven’t really looked for statistics yet, but anecdotally, it seems to me that many Kenyan professionals are not really watching their personal finances all that carefully. Just in the last six months or so, I have had conversations touching on personal finance with a handful of different folks in my office or otherwise in my industry/profession—all highly educated, all with healthy incomes, and all considered to be very bright folks with promising career trajectories.

Why are we not able to take care of our finances? Here’s my thinking on this so far:

* The obvious one is keeping up with the Kamaus, Otienos, and Mutiso next door. Professionals may think, correctly or incorrectly, that their jobs or career advancement require a certain level of expensive dress or similar accoutrements. You've heard of offices where the ladies compete on who will be the 'smartest'. They will take up soft loans to achieve this end.  If the SACCO commitee knows you by first name basis, then your in deep financial problem.

* Many professionals just starting up their careers probably have the hubris of youth. They feel like they are making lots of money now, and they believe that they will continue to make lots of money going forward. This may reduce their feeling that they need to watch their money carefully now.

* Hand-in-hand with that, many professionals probably believe that they are making more money than they really are— that is, that the money they make will go farther than it really does. Many young professionals don’t come from particularly privileged backgrounds; and their reference point may be that they are making twice as much (or more) than their parents were. Like most of us, they don’t factor in the effect of inflation over many years.

* Many professionals are in demanding jobs that require 60- to 80-hour work weeks. This shouldn’t literally mean that they don’t have time to manage their finances. But it may well mean that they lack the mental or emotional energy to tackle the personal finance in the time left— especially if they are not all that comfortable with how to tackle the personal finance.

From : http://www.careerpointkenyajobs.co.ke/2011/08/why-are-we-poor-in-managing-our.html