Safaricom’s Live Chat Featuring Waceke Nduati From Centonomy Gives Entrepreneurs Tips On Personal Financial Management

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Under the hashtags #MakingCentsConversation and #DoMoreWithMPesa Safaricom hosted yet another live chat across various social media channels, to educate entrepreneurs on personal finance and investments as well as touching on how entrepreneurs can use the M-PESA For Business App.  The conversation was hosted by Charlie Karumi and the guest for the session was Waceke Nduati from Centonomy, who gave the following insights on how to think money like a true entrepreneur.

  1. Lose the worker mentality

The first thing you have to establish as an entrepreneur comes from defining who you are. Are you the employer or the employee? As highlighted by Waceke, writer of the book, Making Cents the common mistake most entrepreneurs make when it comes to personal finance, is to start and run a business with an attitude of an employee. The disadvantage of this worker mentality is that, once you earn more, you also think of spending more which eventually affects your capacity to invest. Instead of working to do more with your money, this mentality sets you up in a rat race where you have to work for a certain lifestyle and twice as hard so you can maintain it.

However, when you have an owner mentality, immediately you earn you start thinking of ways you can multiply it. Your purpose becomes investing in the business so one day it can run without your presence and still yield an income. Sustainability becomes the backbone of your financial activities instead of surviving.

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  1. Have a budget

One key thing I noted as Waceke kept sharing her knowledge and experience when it comes to making more cents, is that you can never underestimate the significance of a budget. Putting all your money in a basket and spending it all on daily whims or things one may deem important at the moment is what leads to overspending, poor financial management and living from hand to mouth.

However, if you separated your money – by way of a budget since it enables you to do so conveniently – you are then able to see where your money goes and plan accordingly. This boosts financial awareness and reduces the risk of overspending. Owner mentality also plays a role here. Instead of spending more whenever you earn more, as an owner, your salary remains fixed, and the extra is invested in ventures that can yield more.

Always remember that business money is not your money and your money, should not become business money – see why in the next point.

Having separate bank accounts could help you maintain this separation since at no point would the two mix. Here are the 5 tips to help you stick to your budget.

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  1. Pay yourself

A common myth that has taken root in the world of entrepreneurship is that entrepreneurs are in the business of making money.

However, the reality is that the money we earn as entrepreneurs is often used to look for clients, invest in ventures, pay suppliers, bills, salaries, and other utilities to ensure the business still runs. Eventually, we get accustomed to working to the bone and forget to pay ourselves.

In light of this, the big question then becomes, how much of what you make from your business is actually yours?

One thing COVID-19 has taught us is that a backup plan is necessary. As an entrepreneur, it is important to have money that you can call your own, and set it aside in case times change. Additionally, paying yourself is important because it helps you determine the value of your business, save, grow assets and also build investments that will sustain you if you leave the business.

Check out the 3 kinds of income and why you should have all of them

  1. Have a goal

Entrepreneurship is often associated with freedom as a goal. However, as Waceke mentions, it is important to define specifically what type of freedom you would like your business to yield you. Banking on the previous point, which is paying yourself, it’s important for every entrepreneur to define what’s in it for them.

Ask yourself, can the business pay you until you attain the type of freedom you desire? If not, then implementing a plan is necessary, to ensure that even as the business runs, your goal remains in sight. Most importantly, these goals can be achieved as your business grows.

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  1. Know your assets 

The secret to making more wealth lies in the ability to differentiate assets and liabilities/flawsets. Assets, as defined by Waceke, are things that aid your business along its journey, safeguard your income or increase the value of your income or business. Liabilities or flaw sets, on the other hand, are things that may look good and worthy, but overtime they depreciate. So how do you recognise the two?

  • Develop an asset mindset – an asset mindset motivates you to make more money for your business instead of spending it
  • Know where your money goes – while assets bring money into your business, liabilities take money out of your business. By this definition, if entrepreneur A were to buy a land, or shares and entrepreneur B bought a car or clothes, who among the two would grow their assets and who would end up with more liabilities?

      6. Good debt vs bad debt

Starting a business can be overwhelming, especially if you don’t have a source of capital. For those who’ve already started a business, the choice of whether to borrow to sustain the business is what leads to mental fatigue and stagnation. This is where knowing the difference between good debt and bad debt comes in. While good debt is a loan that can increase the worth of your business, bad debt does nothing for the business. Hence it is important to calculate your risks before borrowing money as taking on debts could offset or build your business.

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  1. Look for alternatives

After determining where your money goes, start looking for alternative solutions that don’t require as much as you are currently spending. Separate the essentials from non-essentials and once you’ve set everything in order, take the extra amount that you will discover has always been spent on non-essentials and use it for your business.

  1. Unlearn 

As we grow, we amass beliefs, societal conditioning and culture that often translate into how we spend and invest. Waceke states that making money should not be all about maintaining social status. Instead, it should be about the success of our businesses rather than peoples opinion of how that success should look like. Ultimately, what differentiates an owner mindset from that of worker’s, is that while a worker’s mindset is influenced by people’s opinions of what they should have, an owner’s mindset and their actions are influenced by the success of the business.

  1. Think ahead

Just as it is important to have a business plan, it is also important, to think of what the next step for your business should be. Waceke advises that you don’t have to think 10 steps ahead. Thinking just about what you need to do next, the goals and the financial actions you need to take to actualise that one step is often more sufficient than thinking about everything at once. Watch out for these 10 mistakes that can bring down your business

  1. Keep records

Knowing where your money goes is essential to running a successful business. This also applies when it comes to your personal finance management skills. Check out 8 reasons why you need to do a lifestyle audit

As the #MakingCentsConversation drew to a close, Waceke mentioned, the lack of records is what causes us to assume that we do not pay ourselves and yet we do. Think of the money you spend on the supermarket, on restaurants, cable and subscriptions, drinks, vacations or vanity shopping. If that money happened to be business money, and you didn’t have any record of it, then in a corporate world that would be labelled as fraud. In other words, failing to keep records is not only a recipe for disaster, but it is also the main red flag that can go unnoticed and eventually cause the downfall of a business.

Related: This is why you should consider taking classes on personal finances and investments

Here are some Money-Saving Tips to Survive A Loss Or Reduction of Income as well as 8 Personal Finance Tips That Will Transform Your Life and The Importance Of An Emergency Fund

Here is the video in case you want to listen in.

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