 In this particular session, we'll dive into an interview that looks at the state of the economy and how you and I can make better financial decisions in 2021. So the coronavirus pandemic threw everyone for a loop in 2020. And as the year winds down, it's time to reflect and reset for proper budgeting in terms of finances and also if you're in a position to invest, this is the conversation for you. So the studio I'm joined by CPA Enok Nyanchoga Munari, he's the managing partner at Nyanchoga and Associates. Thank you very much, Enok, for creating time to be with us. Thank you for hosting me. You were a man of many titles, by the way. I say that earlier, before we start this conversation, and you were very much humble, saying you're not. Yeah, I'm basically Enok Munari, I'm a CPA as you said, I run an audit firm and a consultancy firm and currently delving into a call center business. So truly, I'm an entrepreneur and we're trying to make it in this life, basically that's what it is. Enok, in the holiday season, and in most cases, this time frame, we tend to spend a lot and then hit January, it feels like two months in one. So let's start off by the rules of improving our financial life. What are some of the tips you could tell us? I know we've been through a very difficult year and everyone is crying, looking around wondering what have I done wrong this year that I should be able to change? And as it has always been, December has always been time for reflection. It's time that people get easy away from work and sit with family and probably start thinking through what they have done during the year and how they can be able to improve on those things. So I think it's a good time, people need to look at the financial decisions that they've made in 2020, as much as we've had a very difficult year. What kind of financial decisions have you made, either in savings or in spending, that sometimes you feel probably they were not right or some of them worked for you, you pulled off some of them, and then you can be able to plan for 2021. But the most critical thing that I can tell the viewers today is that financial discipline is very critical. You can work hard and earn so much in salary. But if you don't have financial discipline, especially on how you spend the money that you've earned, you will find yourself in debt and just crying every day. So as people think through what they have done and start preparing for the next year, they really need to think through how they can be able to be very disciplined when it comes to financial decisions and also try to have the culture of course budgeting, trying to look at your expenses, look at your fixed expenses, the expenses that you incur regularly. Then look at these expenses that sometimes you can actually be able to avoid and see which ones, how you allocate your monies for the next coming financial year. If you cannot be able to do that and with very good planning, you will still feel like there's something wrong with the year. And yet it's actually not the year, it is you and the decisions that you make in your life. Alright. Okay. So young people who are listening to this conversation, you are much well experienced when it comes to finance and everything else. So what should we do when it comes to beginning to just designing of our budget? What are the critical things that we should look out for? I think the first thing you need to look at is your income and how regular your income is because we have different sets of young people. We have young people who are in wet-collar jobs who earn salaries at the end of the month. We have young people who are entrepreneurs and only earn when they are able to through their business. That's sure. And we also have young people who are in formal jobs who basically earn at the end of the day. So it all depends on how your earnings are. And once you've looked at your income, then you can be able to project your expenses. I always tell young people that it is always good to live within your means because there's no need for you to earn 20,000 shillings, for example, and you desire to live in a house in Rwaka for 10,000 shillings. I mean, you're spending 50% of your salary in rent. That is a very poor financial decision because at the end of the day, you need to live that life and try and save for tomorrow. If you spend so much without saving and calamity strikes, for example, and you lose your job or your business collapses, you will find yourself going through very tough times. So it is critical for someone to look at their income and look at the kind of expenses that they're incurring and whether they're able to adjust downwards, for example, you are able to adjust downwards without shame because it is your life. It's not your friend's life, it's your life. And it comes to, when it comes to us young people, we have been inflicted with the 50, 20, 30 budget route. And you're trying to, you've always tried to understand how to just go around it, probably could help us break it down. No, for me, I don't want people to focus on book experience, basically, when it comes to budgeting. The most critical thing that someone needs to live to is to live to the realities of time. We come from different backgrounds. Some come from different backgrounds where they support. Some don't come from backgrounds where there is no support at all. They're supposed to support their parents, for example. And you try and design a unique budget for yourself. So don't focus on what you read, focus on your life and your experiences and design a budget that fits your life, fits your experience. Exactly. Because I mean, there are people who want to eat meat every day and there are people who are vegetarians. You will find that their budgets will be different. So if you wanted to go down to a book kind of budgeting program, you may end up actually doing things that you don't like, doing things that necessarily you could have actually avoided. So you just need to look at your life, look at how far you've come, look at your family, your background, and then come up with a kind of budgeting that makes you happy. And at the end of the day, also gives you an opportunity to save and to ensure that the people around you are living comfortably. Is budgeting all about paying bills? Because I'm wondering, it's the festive season. I would want to break the bank for my family and friends, just to show them love. Is budgeting all about paying bills? If you broke a bank today, you'll be short. Lara can tell you. Or you'll go in for so many years. And there's no need for you to go all the way to make happy. And this is something that people have to realise. Happiness comes from within. These world things that people feel are the ones that are making you happy, they are actually not the ones making you happy. When you're happy from within and you're comfortable with the situation as it is, you will always live a happy life. You will sleep knowing that I've done my best. This is the reality, this is it. And this is how I'm living and I enjoy my life. So budgeting does not look at just spending. It looks at also saving and it looks at earning. So it's a combination of how you earn, how you spend and how you save. Because your earnings should be equal to your spending and your savings. So now the question is, how do you balance the three? Because on the earning side, you may not have so much in terms of what you can do. Because you're probably on a fixed salary and if you have a side hustle that you're doing, it can be giving you some sort of profits. But that is your total earnings. Now, how do you spend the money? Do you go on a rampage because it's Christmas and spend everything? Then when it comes to January, by the 10th of January, you're all over accusing your friends of not being true friends. That you know, you guys have stood for you when you had problems. Now I need 2000 feelings to pay for my bus fare and no one is coming through for me. Why? Because you did not budget properly when it comes to festive season. So something else that I was talking actually on your sister television is that the other challenge that we have as Africans is that we remember its holidays when it's December 20th. And then you start asking yourself, where can I go? Can I go to Naevasha? You're not calling everyone trying to book for a room or something and you realize because it's high season, the expenses are very, the room, it's very expensive to be able to go for your holidays. So if we can be able to have and the young people should be able to lead on this, starting to plan early. I've come from a culture and my former boss is from the UK. There's something he taught me when I was the finance manager there that immediately the December holidays end. He starts paying for his next December holidays, planning and paying. So by mid-January, he already knows that we're going for holiday in June. We have another holiday with the family in October and another one in December. They have identified where they're going, they know how much they're going to spend and they start making deposits for the same. That way you have a fixed calendar for the year that you cannot change because you've made bookings and you work towards ensuring that you go for those holidays. The mistake that we do is that we sit pretty until December 20th. Then you sit in the house asking yourselves, now we have the bonus, where can we go? Then you find everywhere, it's fully booked. So the best you can do is go to some hotel in Nairobi, take photos, swim, enjoy and tell people how are we enjoying our festivals. But at the end of the day, deep down you know you are not because there's something that you're supposed to do that you didn't do. So it is good that people start that culture of planning the year while in advance and saving towards achieving those goals. Apart from just planning way earlier, how can you start the reflection on the money journey? Now considering or putting yourself in a position where we messed up in 2021, how can you start the journey? One person who is again emotional kind of budgeting because when you want to reflect on the year, then you want to plan for the year ahead half of the time you will be driven by emotions. And you're driven by emotions of the things you never did or the things you did wrong or the things you did right. Those emotions can actually misdirect you and think you're planning for your coming year in a good way but you end up doing very poor planning. But it's always good to start earlier the year and start thinking through yourself as a person and what you want to achieve. Look at your achievements for the previous year without emotions. What were your set targets in terms of what you wanted to achieve? That business that you wanted to open, did you manage to open it? If not, why? Can you be able to do it right in the coming year? Or if you managed to open the business and it worked, how can you be able to improve that business? Because at the end of the day, you cannot start talking about spending if you've not earned the money. So we should be taking more time to think about ourselves as businessmen, ourselves as employees, as entrepreneurs and what we can be able to do to improve our revenues or our sources of income for the coming year. Because with so much money at your disposal, you can easily be able to budget. So I think for now, during this festive season, for the next seven or so days, it should not be time to be excited about life. Of course it's good to be excited about life but it's time to be able to take time and reflect on 2020. Look at your life as it has been, the decisions that you've made and look at the things that you didn't do right that you can be able to change and look at the things that you did right that you can be able to improve on for the coming year. Oh, I see. And when it comes to spending, what is the best way to just track like tracking the way you have been spending your money? I have a friend who usually writes everything down like she carries a notebook, like any kind of spending that she does. So what is the best way to just track your spending? I also have a friend who does that and I always make noise at what he does because as an accountant, I look at it from two perspectives. The first perspective and is the bad one is something that we were taught in school of something called a sunk cost. A sunk cost is money that you've already spent. You should not be crying about money you've already spent because you can do nothing about it. That is a sunk cost. Money spent, it is gone. Don't bother yourself with it. But then on the other hand, as someone who wants to advise young people, then I realize it's good to do budgeting and to track your expenses because a budget without tracking, you cannot actually be able to help yourself. You need to prepare a budget and be able to track that budget. So there are two ways of tracking the budget. One good way is you go to an Excel worksheet, for example, prepare your budget. Say this month I'm going to spend 5,000 on food, 2,000 on travel, I'll make my hair with another 1500 shillings and all those things. Then as you incur those expenses, input them in the worksheet so that at any point in time, you should be able to know how much is left for a specific expense item so that you don't overspend because if you don't track your expenses, you will end the month and realize that you spent less on food because you spent more on hair, for example. And the reason why you spent less on food is because you unnecessarily spent more on hair without noticing, then you ended up not having money in your pocket to buy that good meal that you wanted to buy. But if you're able to track your expenses on a daily or a weekly basis, you can be able to know that the amount available for travel is diminished now. I need to see what I am able to do. So if you can then reallocate some money from one expense item to that expense item, then you can be able to finish the month. And something else that young people have to know, you have two sets of expenses that you incur in a month. You have fixed expenses that you can do nothing about. Then you have more variable expenses I want to call them as an accountant that you have so much you can do about. I mean, you have to eat, you have to board your Matatu every morning and back to home or use an Uber or fuel your car. You cannot avoid that. You have to pay your house rent. But you can avoid going to the bar. You can avoid, I mean, going for a fancy picnic, for example, you can avoid overspending on shoes. Those are things that you have control over. It all goes down to financial discipline. So it's how you are able to manage your expenses in such a way that they fit the money you earn without you struggling. Yes. As we had to the new year, as a young person probably you got a job and also... From where? Where did you get a job from? We are creating a scenario. We are creating a scenario where you just got a job you still have the school the school debt the university debt then you want to start a new journey when it comes to a financial aspect of budgeting and saving probably your investment. What is the best way to just create a debt pay off plan? Debt pay off plan for your hell blow. You see this is the mistake that most people make and I can tell you, especially those from campus, you enjoy the money when you are in campus you really enjoy the money. But when you start earning, you don't want to pay off. So what do you do? You hide. And you know every month it's accumulating interest. So by the time you are caught, because you will be caught and you don't help us as a way of catching people. Personally I was caught. I mean I have to be honest. After campus I really did not want to start paying my hell blow. I had so many other things I wanted to focus on. But by the mere fact that my employer was paying my NHIF and my NSF, that data actually caught me and I paid off and right now I'm cleared with the help. So what someone needs to do is to live to the fact that you have that debt. And remember this money you enjoyed when you were in campus. The best thing to do is that the moment you start earning ensure that you prepare a pay off agreement with the person or the money. And when you do it willingly you end up with paying a lesser amount every month which can be deducted from your salary or you can be able to do a monthly payment through your bank in such a way that you don't end up struggling and you don't end up accumulating that debt. Because the biggest fear is that if you take longer to repay the loan it will move from 200,000 to 500,000. Then you start moving around complaining on how the government is not supporting young people. Why? Because as a young person you have actually not supported your fellow young person by paying off your loan to be able to benefit. And something else I want to tell young people is that when you get a job try and live your life. Don't put a lot of pressure on yourself that you want to start saving from month one. Yet you don't have a good seat in your house. You don't have a TV. You're probably living in our single room. Try and invest in yourself first so that you can be able to get to a point when you say I'm comfortable. You'll be able to start investing in other things. So if you put yourself under pressure from the word go and you're the one who's looking for this money you end up, you get to a point when you hate your job and you hate your job because you so committed the salary, you're not seeing the need of working up every morning to go to the job. So I always tell young people that just be easy invest in yourself first. That is the most important thing. Buy a good cloth if you want buy a good shoes, buy a good seat for your house. Then when you feel now things are good for you you will even have the opportunity to start thinking bigger but you cannot think bigger when you're sleeping on the floor. That's very true. So you should also budget for that. expenditure. Not being so much tight on it. When you're budgeting you need to be flexible because when you run on a tight budget you end up in a situation whereby you don't have room for variances. You don't have rooms to overspend or to cover emergencies because your friend can be arrested. Your mom can call you for 500 shillings and if you're running on a very strict budget you don't have that room. So a flexible budget gives you room to be able to spend right on your expense items and have enough money that you can be able to use on emergencies. So if the emergencies don't occur then you will have money that you can be able to save or carry forward to your next month. So looking at the situation in the country 2020 has been a very hard economical hard time for many people who actually lost their jobs. So what is your outlook when it comes to unemployment? It is grim because that's the reality of this country. We have to sit here and start lying to ourselves that we will work up and I told you earlier it's not like 31st December midnight will be so magical that coronavirus will disappear the locusts will disappear jobs will be created overnight. No. You have to look at the fundamentals of this country and how jobs are created in this country. We are a country that is running on a very huge debt currently. The government is struggling to pay salaries. The taxes are on strike as we speak because of so many other issues surrounding how the government has been spending money. Corruption is on very high currently because of the kind of people that we have with public office. So if we cannot be able to change these things then the kind of positivity that we need towards 2021 and the hope that we can be able to create more jobs becomes a challenge. But one thing I know is that Kenyans are very resilient and 2021 is going to give an opportunity to be able to relaunch their businesses, relaunch their careers because it's always a good feeling when you start the year on a high and for the businesses that have struggled especially in the tourism industry I know that people are going to look forward to a year when they can actually be able to relaunch their businesses and if the businesses are relaunched and they are successful then we will start seeing opportunities for employment coming in which will be a good thing for the young people because I think it's reached a time when you have to advise young people to look away from white collar jobs because the white collar jobs are not there the government is not creating enough jobs especially in the formal sector and the opportunities are in the informal sector so young people coming from campus people have graduated with diplomas people are fresh from high school and they feel that they don't want to proceed with their graduate studies they need to look elsewhere and the elsewhere is entrepreneurship the elsewhere is business of course there are struggles with starting a business but it always has that satisfaction that you are doing your own work you are hustling hard and you are coming up with some coins to spend that is where the young people need to focus on and of course look at the opportunities for example schools have not been open for the last 9 months so I can tell you the supply chain in the schools is completely broken schools consume a lot in terms of food stationery IT infrastructure and all those things so if the schools are opening on 4th of January there will be so many opportunities for new people to be able to venture into business and the old suppliers to be able to see how they can be able to relaunch and get those jobs people should be ready to take advantage of those opportunities welcome to money management what will be your top tips that you will give us I think the most important thing is to be real to yourself to be real to yourself in a way that you appreciate what you have before you can be able to start to spend because if you are one person who gets excited with a paycheck then you end up to be that person who does what we call eating chicken in the first week eating chicken products in the second week then you start eating like chicken in that week because you just get over excited that you have been paid as a net for example people are getting their paycheck this week the next paycheck will be on 30th of January so it is almost 6 weeks away so if you are real to yourself and you are real to the fact that this is the amount you are you are real to your expenses and that means you face the reality that you must pay your rent that you must pay your expenses you must pay school fees for your kids or for your siblings you will not go wrong but if you are one person who has who is financially in this plane in such a way that you have this carefree attitude but you know tomorrow you spend what you have now it becomes a challenge because you will end up either being in debt or just cursing people for things that you should have done and you never did financially literacy especially for the young generation we try to talk to young people and the problem with the young generation is that when they are free they are spending time on Netflix and they are not getting enough information from Netflix so the reading culture of the young people completely disappear that's why they always say if you want to hide something from an African just hide it in a book they don't read because the only way to learn about financial literacy is to take time and study what other people do either through watching programs that are people talking about financial literacy or reading books or attending these free clinics on financial literacy so people really need to take time and read the same way you read to pass exams you need to read on how you are going to survive face the reality first but also try and read and read so that you can be able to know where the opportunities are and what you need to do to be able to save that you can only be able to get either by talking to someone who has experience or someone who is world vast in that region, in that area if you don't do that you will be living your own life creating your own fantasies that are away from the realities of life and then you realize that you are not moving as a person and you are wondering why your friends are moving forward and you are not moving because there are things that they have done they have taken time to pick advice from their seniors they talk to their friends when they are having a drink they sit down and talk about their life and know how do you save how did you manage to buy your car how come you live in a bed seat of 10,000 and I cannot afford it those are the things that help you learn from your friends what is your final remark when it comes to budgeting and looking forward to 2021 the only thing I can tell the young people listening in today is that tomorrow always has good opportunities and we don't want to look at the struggles we have gone through in 2020 and want to carry that to 2021 we need to be positive we need to be positive to the fact that the world is moving we now have a vaccine for the Covid virus we just hope that we can be able to resume our businesses in 2021 in a good way so we need to be very positive on how we approach the year we actually have to be cautious as much as we are positive we need to be cautious on how we move forward especially for those who are job hunting for those who have jobs and the jobs are on the line and they need to really improve on performance for those who are starting businesses for those who have businesses that have been successful and they are looking forward to a better year everyone needs to look at a way they can be able to better their life in 2021 and by bettering your life you will be able to have more to spend you will be able to have a better life you can go for holidays and you can invest in your family but as much as there is a green picture of the coming year I can tell you the resilience we have with Kenyans people always have a way of making it even through these difficult periods like we currently have so I can only wish the young people well I wish them all the best let them not over indulge in December and they need to realize that the virus is actually here with us so as you party you know I have seen people saying which police station are you going to sleep in on 31st because there is no way I am going home at 10 on 31st there are also memes on matches of course people need to move away from that and realize that don't over indulge you need to stay safe and the only way you can be able to get to 2021 is for you to take care of yourself between now and 31st and don't over spend if you have rent that you have not paid pay it now if you have school fees for your kids that you have not paid pay it now in fact on 24th as people go to shop for Christmas go and shop for the uniforms for January that way you will have less money to spend on Christmas but you will have a fulfilling January if you do it the other way around you will have a fulfilling Christmas and less money to spend in January very very interesting so what are your plans for the festive season so Enoch we had plans of course to travel but then again the reality is there is so much have very young kids and I don't want to expose them so much because of I mean if you go to swim and you go to a restaurant the kids cannot be able to manage to move around with the mask so the risk is there so for me I have decided to work all the way to 24th go and enjoy Christmas with my parents and stay with them until new year then I come back happy holidays thank you for creating time to be with us today Merry Christmas to everyone Merry Christmas to you so that is CPA Enoch Nyan Choga Munnari Managing partner Nyan Choga and associates helping us conversing with us on matters pertaining budgeting and ways to do proper spending when it comes to 2021 better vision, better outlook when it comes to money, money, management I'd like to offer a channel so you can find us across all our social media handles at Michelle Ashira so you can find me across all my socials and we have much more coming your way right here on Entrepreneurship Tuesday