 Good morning to you. Thank you so much for sticking with us right here on Y in the morning. My name is Ram Magukko. It's a pleasure being with you today. It is a fun Monday morning and you're just in time for the next discussion of the day. If at all you're just joining us, we're coming to you live from the broadcasting house here in Nairobi, Kenya. We're also streaming live through our website. That's www.kebc.co.ke-y254. My name is Ram Magukko. It's a pleasure being with you today. You're just in time for the next discussion of the day, as I said earlier on. And today we want to talk about matters concerning financial literacy. What is financial literacy? Do you think you're financially literate? Let's talk about this. To help me in this discussion, I'm with Kylian Amolo. He is a lecturer and consultant and also a researcher. Welcome. How are you feeling, my brother? I'm feeling good. Thanks for coming. It's a pleasure. You are a lecturer. Yes, I am. What is that? First of all, which school? KCA University. KCA. Yes. Auto-KCA. OE. OE. Wherever you are. So you deal with matters concerning finance. Yes. Thank you so much for coming, my brother. And of course, I invite you from home, from wherever you're watching us from. Be part of this discussion, be part of the conversation. Let us know what you think about this discussion here. Financial literacy. Do you have questions for Kylian? We'll be able to answer them right here on one in the morning. What do you feel you need to do to be financially literate? Are you having challenges concerning your finances? We shall be able to answer your questions and sample your thoughts even as you continue. The hashtag is why in the morning at Ram Aguka, which is my handle, and at Y254 Channel, which is the official station handle. First things first, Kylian. Yes. What is financial literacy? Financial literacy is about an understanding and application of the basic skills in financial management. An understanding and appreciation of the basic knowledge that you need to understand in matters of finance. It is about organizing and planning for your finances. You were talking about something basic. Yes. Yes, this basic technology. Yes. What is basic? Basic for many people. Yes. What we mean by saying basic is that you don't have to be a finance expert to understand some of these things that are required in financial literacy. You don't have to be an expert in finance, for example, to organize for your own personal finance. You don't have to be an expert, for example, to appreciate and understand how to plan for retirement. Yes, you can grasp that knowledge very fast and understand. That is what we mean by saying that it is basic. It is not that deep. It is not that it is not something that is only for professionals in finance. So anybody can be part of this discussion. Anybody can be part of this discussion. It cuts across age. Correct, correct. All right. It cuts across the disciplines. All right. Yeah. So here we are looking at financial literacy. It is having basic knowledge. Yes. Or finances. Yes. All right. Whether you are an accountant, whether you are an engineer, whether you are a medical doctor, whether you are a pilot, you need to have an appreciation of some knowledge of finance so that you can be in a position to plan for, for example, your savings. You can be in a position to understand about matters credits. You can be in a position to understand about matters investments and all the other things that fall within the purview of financial literacy. Is it possible for someone to gauge themselves and have this meter where they can be able to know their status in terms of financial literacy? Can someone know or understand or gauge themselves to know whether they are financially literate? Yes, you can gauge by trying to look at yourself, look at your finances, for example. You realize that most people in this, not just in the city, in most parts of the world, you are unlike today and within like one week you have nothing. And people live from hand to mouth. Yeah. And most people end up not planning for what they get. And as a result of not planning, failing to plan means you are simply planning to fail. And we are talking about financial planning here. And the starting point is what are your sources of revenues? What are your incomes? And then what are your expenditure or what are your expenses at a personal level? But not clearly. I'm looking at somebody asking themselves this question. Yes. Am I financially literate? Good. Because people get money every single day. Yes. People earn money and they spend money every single day. But can I know, am I financially literate? Because some may feel like if you tell them you are not financially literate, sounds like an insult. Correct. But still living in denial because most people are not financially literate. It sounds like an insult but it's the reality. Yeah, because most people are not financially literate. Can someone know? Because someone watching it today will ask themselves this question. Am I financially literate? Maybe after we've gone through the show, someone can gauge themselves based on what is going to come out here and apply at their own personal situation. Wonderful. So as to be in a position to tell whether they are literate or not. Yeah. Science of financial literacy. Science of financial literacy number one is living within your means. I love that. Living within your means. Yes. A big struggle for many youths. Yes. A big struggle. Many youths can't afford to live within their means. Correct. People go beyond their means. People go beyond their means. People try to copy other people. There is a lot of peer pressure. You bought a suit. I also want to buy it to be like you. And my means and your means is not the same. So at the end of the day, I end up struggling financially because I'm trying to compete with you. Or I'm doing things to impress a third party somewhere. So I end up not living within my means. Yeah. So that is the starting point. The first indicator that someone is financially literate. This person is living within their means. If you look at an individual that is trying to pay house rent and at the same time look for money to facilitate their transport, food, water, electricity. The basics. The basics. Yes. These basics take up more than 50% of their salary. Correct. Is that living within your means? If the basics are taking more than 50% of your salary and you are okay with that. This is the most important thing. You are okay with what? With that. With that. That is still okay. Because the way I plan for my future and the way I plan for my finances will not be the same way you plan with yours. In financial planning, we are not talking about absolute figures because these figures change. My figures and your figures are not the same. So the best way of approaching this financial planning is by talking about percentages. You have your income. I have mine. Why don't I allocate a particular percentage of my income for a particular course? So that if my income grows, what has been allocated for that course also grows. Suppose I had allocated for example 20% of my income for a saving. Obviously, income will be growing progressively as the years approach, as the years progress. And that means my savings will also be doing what? Be growing other than allocating a particular figure because that figure will remain what? Constant. And remember for most young people, their sources of income are not that regular. How can somebody who is watching you today ensure that they start living within their means? You're talking about percentages. I don't know if that applies in this particular question. Yes, it does. How can somebody start by living within their means? Number one, what is your source of income? How much is it? Does it come? What is the frequency of that income? Does it come on a daily basis? Does it come on a weekly basis or on a monthly basis? And how much is it? After you have realized how much you are earning, sit down with a piece of paper and begin distributing this income among those various needs that you identified earlier. Let's take a pen and paper. Yes. Now take a pen and paper and let's start distributing. Killian, now let's talk about 100%. Yes, let's talk about 100%. That is a salary. This person is getting it. This is 100%. Yes. I'm not expecting you to allocate 80% for rent. It has to be a modest percentage that will enable you to do other things. Otherwise, we've seen people working in this city and retiring after reaching 60 years and they go back home empty-handed because they never did what we are talking about. Now they're waiting for the MSF thing to go through. Correct. Which is not even going to happen. Correct. So to avoid that, you can begin sitting down today. You are 100% based on your preferences. We are not saying that there is a particular percentage that you must allocate here and a particular percentage that you must allocate there. It depends on your unique situation. Yes. If, for example, you've decided that 30% of this income is going to be for your rent, it doesn't matter where your friends and colleagues live. You are not living a life of impressing anyone. You allocate that 30% to your rent, right? And live where that 30% will take you to... Is there a limit for rent in terms of the percentage? I mean, I'm... Your advice, yes. My advice is that your rent should not be going up to, like, 50% of your salary. Or even 40%. Even that one I'm still seeing on the higher side. Yeah. At least at most. At most. 30%. Correct. So that you are left with the 70% to do other things. You are left with some percentage to save, some percentage for transport, some percentage for food, and some percentage for any emergency. Remember the saving that you are putting here. People confuse this, that this is what you are putting for emergency. Remember, in most cases, if you put some money somewhere for an emergency, there will always be an emergency. Even that hunger, you are walking and you feel like you are hungry. It comes out to be an emergency, so you end up using that money. Yes. In terms of savings percentage from the 70%, how much? You have allocated 30% for rent. You can allocate 10%, or even 20% for the saving. And that makes it 50%. Suppose you have allocated 20% for the savings. See, that's already 50%. You are remaining with the other 50% for the other basics now. So 30% for rent, 20% for savings. Correct. Now you have 50%. You are at 50%. Yes. So we are remaining with this other 50%. Now do with that 50% as you saw please. So this 50%, remember you have transport, you have food, you have clothing, you have personal grooming, you have loans, correct? You have loans and other commitments and the financial obligations. Yes. You have siblings here and there that you may want to take care of. You need to plan for that. You know people run out of funds because they end up doing things that they never planned for. We are not saying that you should not do these things. Yes, they are good, but plan, incorporate them in your finances so that you don't get disorganized. But one thing that you're saying that we ought to always have in mind is this percentage distribution in terms of your salary depends on an individual. Correct. It is not cast on stone. Correct. Because there are instances in which you know my rent, for example, could be somebody else's transport. You get that? Yes. What I spend on my rent is what somebody else spends on transport. That means that person, their rent is much what? Higher. Much higher because of the differences in situations. Your rent could be someone else's salary. Correct. It could be someone else's salary. That is why it is good to sit down and look at your own personal unique situation and what are your goals that you want to achieve. Very, very important. When you are planning for your finances, what are your financial goals? So you're saying one sign of being financially literate is understanding that you need to live within your means. Correct. That's one sign. Yes. Second sign. Do you have goals that you want to achieve? Financial goals? Correct. You are referring to financial goals? Correct. Do you have financial goals that you want to achieve? What are financial goals? Because let's say, for example, I want to have a house, my own house, 10 years from today. How much is it going to cost me? How much will that house be worth 10 years from today? I will have that in mind. I will quantify the value of that house and think about it in terms of financial goal. Somebody who doesn't have a financial goal is not financially literate. Is that what you're saying, Kilian? Do you know that we are talking like this because we are of our level of enlightenment? Yes. There are people outside there who don't think like that. Exactly. There are people outside there who have never thought of what we are talking about now. I don't have a house now, right? But I want to have it in 10 years' time. You get that? Somebody who such a discussion is like a pipe dream. Correct. Something that they have never even thought about. And remember, if you don't have a place that you are going, you can never make the first step towards going there because you don't have it in mind in the first place. In the same way, if you don't have a financial goal, how can you work towards its achievement? But somebody is there watching it there and saying, you know what, Kilian, I don't have a job. I don't have any sort of income. Where should I start from in terms of getting this financial quote? Correct. Let me speak like this. I was once a young person at some point and I depended on handouts from friends who were already employed or from uncles and aunties who were already settled. So what normally happens is that this money does not come regularly. It comes once in a while. And the most young people, the moment they get it like this, they go drink it off. So to avoid that, did you know that that time that you don't have a job, that time that you don't have any source of income, is the time that you can plan soberly more than any other time? Really? Yes. That is the time you can plan so soberly and realistically because do you know that people's mind changes the moment money begins to come in? That is when the real you gets unveiled. There was a meme that was trending a few months ago that Pesakido got to Shataka to buy for MCA. Correct. I don't know if you saw that meme. Correct. Correct. That means you have thrown everything outside the window. You have forgotten about everything that you were thinking about in the first place. You have forgotten your background. Correct. You have also forgotten about your background. So sit down and you know when I was talking about financial goals earlier, people save. There are so many people who save and these savings end up being wiped out. Why? Because they don't have any particular purpose that they are putting these savings for. That is what I meant by saying that have a goal. Think of what you want to do before you even think of these finances. So before you start saving have a goal or should you have a goal after saving? Have a goal before you even start saving. Have a goal first. If you don't have a goal, saving becomes non-important. Not non-important. These savings are supposed to be leading to the achievement of that goal that you have. Yes. And what we are seeing is suppose I always remove a thousand from this pocket and put in this pocket every other time and it is just there without any intention. Anything that comes up I will use it. You get the logic. Yeah, I get you. But if I move a thousand here and put it here with a purpose. With a purpose. And I always remind myself that this is for this purpose. Yes. It will always get out only for that purpose. Correct. That is why the starting point is supposed to be the goal, the purpose. What is it that I want to do? How much is it worth? And now how can I structure my savings to go towards that? Because I already have a goal in mind of what I want to do with this money. Yeah. Big problem there. There is a big problem. Yeah. So I just want to speak to our listeners that before you sit down and you say that I want to save this have in mind what you want to do first. Do you want to go to school? And when do you want to go? Have in mind what you want to do and when you want to do it. Those two things are very important. The what and the timeline. So somebody who is not going not going but someone who has no job watching it today. Yes. You're saying such a person can also save. That such a person can save. They can save. Yeah. And if they get some small token or hand out here or there. Yeah. They should spend some of it. Correct. Spend. Yeah, save the rest. Yeah. They should save the rest. Yeah. And they should save the rest. Yeah. Because that time that you don't have a job you can save for any eventuality tomorrow. Even that time that you don't have a family people who are already working but they don't have families. Let me drink the all of it. Let me marry with the all of it. You can begin saving for your children's education before long even before they are born. Kill you and take a short break. Yes. And then we'll be back and then we'll touch on other signs of financial literacy. And even as all of these signs ask yourself these questions. Do you have Nikam Ogondwa? Yes. Do you have these signs and symptoms? Correct. If you have them then you have the disease but in a positive way of financial literacy. Correct. You have it in you. Keep talking to us ask those questions. We'll be back with Kaleon in a bit. Keep it on in the morning.