What comes in your mind when the term ‘spending money’ is mentioned?
What comes into your mind when the term ‘saving money’ is mentioned?
Read this article and your thinking about these two terms will change completely.
College Life
I was in college with two of my friends, Kamau and Ochieng.
Kamau and Ochieng viewed money differently from me. Kamau and Ochieng spent their money with passion. Kamau and Ochieng did not like the idea of saving. However, I liked to save every coin.
When I was growing up, I was taught saving was a good habit. It was a virtue. If you looked miser and saved a lot, you were respected and highly thought of. I was told money is valuable, I should save it for some future rainy day. This has been my mantra. Save, save, save, save endlessly.
Saving is Differed Spending
One day I decided to go personal with Kamau. I asked him why he did not save his money. Kamau took a deep breath, looked straight in my eyes and told me something that I will never forget. Saving money is deferring spending. Savers will most likely spend their savings some day. Most likely they will spend their savings on something they had not planned for. Most likely they will spend unwillingly. e.g. an emergency will crop up and they will run for their savings to solve that.
Spend Money to fuel more spending and enjoyment
Kamau had a different philosophy. Many people do not know it. Kamau spent all his money recklessly wise. He told me that, many people think that spending money means drinking beer, buying new clothes, buying new gadgets, buying expensive phones and ipods or living in expensive rented houses. But the truth is, that is not spending, but wasting money. Basically, those people use money and they enjoy it but it doesnot fuel more spending.
Kamau told me he spends his money to fuel more spending and enjoyment.
I got curious. He continued, Although we are in college, I spend my money on things like stocks, plots, books, audiobooks etc. Kamau told me he bought cheap stocks that had prospects in future. That year was 1998, he was buying KQ (Kenya Airways) shares at ~ Kshs 7.They were dirty cheap.
I was naïve and uninformed then, I had no idea of how stock market worked. How did you learn about stocks? I asked trying not to show how ignorant I was. Kamau was generous with his response. ‘I have been reading books and magazine about stocks since high school’ Kamau reverberated. ‘Since high high school!’ I exclaimed. He politely answered, Yes. This shocked me beyond belief about the usefulness of reading an extra page.
Traditional spending
Ochieng also spent his money, but on things that Kamau despised. Ochieng spent his money on best music player in the market. He had the best TV in his room. He always scrolled on his expensive iphone. Ochieng knew the best bar and night club in town. Ochieng knew where to buy expensive drink. He danced with fashion. His spending never fueled more spending, it depleted his money. He always ran out of money, but Kamau never did.
Traditional Saving
When I look back, I am shocked, fascinated, wooed and inspired. My savings were used at different stages of my life. Sometimes it was against my wish. Other time wishfully, but somehow I spent it. Maybe, someone got sick and I had to chip in or I had to help settle school fees. Spending my savings this way was noble, but, I could have did all these things and still have more money. Imagine if I took health insurance or education insurance plan.
Ochieng has a constant struggle a.k.a rat race. He has to look for more new money to fuel his spending. He spends his money on things that exhaust his reserve but doe snot generate more money.
Kamau was a genius.
His stocks have doubled, tripled, quadrupled and overflowed. The KQ shares went up to Kshs 145 and he liquidated them. Kamau had bought only 3,000 shares. This translated to Kshs 435,000 commissions included. He had used only Kshs 21,000+ commissions to buy the shares. Mathematically, Kamau made 1900% profit. In addition to this capital gains, Kamau was enjoying his dividends.
The cheap plots that Kamau bought near the university are hot cakes now. Kamau has made millions by spending his money. Kamau spent his money and he continues to spend it unreservingly. His spending style is fueling more spending and more enjoyment. Spend money to enjoy it.
Look out
In my two cents opinion, If you are in Kenya, look at Co-operative bank shares and Centrum. They are cheap and they were dirty cheap late last year. They might be a good way to spend some money.
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