 All right, fantastic, name of change, okay? This is now the Sakwa, okay? Welcome back, my name is Ban Sakwa. You're watching Why In The Morning. This segment is about entrepreneurship and today's interesting topic is all about money. And I remember before we took our break, I had asked you, where does money come from? You know, all these hard stories of, you know, you borrow, like they tell you, go borrow money from a friend or go to a bank, get money or save or start a business, but the question is, this capital, specifically now money, the item or the commodity of trade, where exactly does it come from? So we're going to talk about that. And also the conversation just around, you know, how money works, the relationship you have with money from, you know, a banker's perspective to now as a monangy, a common monangy perspective and what not. So we're going to actually have a very interesting conversation about that and joining us live in studio with us is Edwin Masai Mushira. He is a financial consultant and he has had also an opportunity to work with some of the leading banks in Kenya including INM Bank, SBM Bank and he's also a business owner as well. So he'll tell us how he went like from working in the banking industry to becoming a business owner and much more. So take a pen and paper and come close to your TV and good morning. Good morning to you. Thank you for having me. Welcome to I2 for 4. Nice to have you. Thank you so much. Right. So we were having a conversation behind the scenes and we actually just trying to like get through a quick run through of what exactly happens when it comes to matters of money and banking to you from a professional perspective. What do you think should be the conversation starter when it comes to, you know, the conversation about money? Where should we begin from? Money is a broad conversation that's actually very, very interesting in regards to where it starts, how you're going to use, how you're going to expound it, how you're going to get people to work with it. By working with it, is it how do you get investors on board if you're doing a business? If you are working, how do you manage your finances? How do you look at what aspect of things to look at? So there are very many ways of looking at money and probably the best is how to get the money or what money is in the first place. So maybe that's why maybe we should start. So what is money? That's a good question. Where does it come from? So as we were talking about this, there was the inside joke of what is money? So bankers say money is stationary where basically we look at it as paper or as coins, so to speak. So don't look at the value of the money. Money, however, has value and value is pegged currently in Kenya by the CBK and where we are and money is a form of trade. And it depends without looking at do you want to buy shopping? Do you want to pay school fees? Do you want to buy a house? Do you want to rent out a car? So money is a means of satisfying needs and wants, yes. So basically it's like you need to have money. You can't escape. You can't go through life without it. Unfortunately, right now we can't work without money. That's why we are. And to ensure that the essentials of life are met, money is key in all this. Right, let's switch gears a little bit and talk about now. Let's say the local person, a person who is not financially literate. I remember behind the scenes we talked about, we talked about when you get your first million, how do you handle it? Are you going to spend it? And you mentioned your spending habits. For example, a student, a campus student, let's use example for campus student, you've just been given 700,000. How do you actually plan from that money so that at the end of the day you have something meaningful out of it? In as much as years you're going to spend it, of course money is meant to be spent or served and any other thing that happens to eat. Now from a person that should be maybe, let's say, have some form of understanding or the dynamics of how to actually handle that, where do they begin from? That's a brilliant question. Where do you start? The better question is where do you start with the shilling? Everything is on principles, principles of money. How do you handle money? How do you handle your needs? There's a basic rule where you split the money into three ways, 50%, 30% and 20%. Also it's 50, 30, 20 rule. Yes. Wow. So... She'll explain. Yes. So 50%, basically this goes back to the conversation where we had when your kids, what are needs, what are wants and how can you split in between two. So let me start. So needs are essential that you cannot do without. And wants are things or items or activities that can better your life. And that aspect will be savings. So in the 50%, that's where you spend on your needs, that's on your house rent. If it is a student, that's where now you look at books, essentials, if you're looking at shopping, basic shopping. Then on the other hand, you look at the needs. So from there, the needs move to the wants, which is about 30%. Now for the wants, these are things that better your life. You want to better clothes, better shoes. You wanna matter too. Now you want a car. So those are things that look at wants and those things that can be able to readjust. For instance, if your wants go beyond what you're having, you can reduce them. However, the needs, those are items that you cannot reduce. For instance, you cannot reduce the amount you eat. It is, you need to eat to move. You need to pay that bus fare. It's mandatory. Indeed. So those are aspects that are really, really important to look at. So that's where the 50% goes at. For the last or the 20%, that's where you look at savings or emergency fund. It's also a small but a very broad area as well. For instance, when emergency fund, you look at medical care. If you're not an institution where you're being given medical insurance, you need to save up for it. You need to save up for retirement. That is something that people don't really look at. It's like a financial plan. Is that what we call now financial planning? Yes. So you need to have these things way, way before you have the money. Oh, you need, it's like your manifest. It's like you're planning for 10 million that you don't have. Yes, yes and no. Okay. Yes, you need to plan for what you don't have. However, you need to plan for what is adequate. Okay. So, you need to look at this. This is the level that I need to be. Those are the ones. And this is really what I need to do so that I'm able to get to this point or to survive. And then there's what you look at after. It's always said that most middle-class cadence are one disease away from poverty. How do you negate yourself from that? It is from the 20%. It is from these savings that you put across. It is not very easy to convert land buildings and cars when you have a medical emergency. You need cash. So, the instruments that you can be able to use like unit trusts, fixed deposits, simple deposits. So, there are things that you can be able to do and invest in that 20%. That really doesn't look much, but will elevate you from problems when you are in those dire problems. All right, yes. Interesting, interesting. Now, from a financial expert's perspective, of course you worked at a bank and the transaction, I'm sure there's like a many million transactions that happen in a day or maybe in an hour, especially in, you said there's tiers of banks like first, second, third. At what point in your experience, when you see a person making a transaction and you say, bro, you have bad spending habits or from the way you're spending, clearly you need something. Like you need to actually correct on your expenditure or your spending habits. What is the philosophy behind that? In banking, the various things that people look at. For starters, what you talked about, the spending habits. You bank a check together or you get an outrageous in today or you just get money, deposit your money in today. Then two hours in, it's out. That's a red flag. That means you don't have what bankers call retention. And you can retain your earnings. So if your earnings are not traceable in terms of the ruler I gave you earlier, then that's showcased as a red flag. There are individuals who actually have a lot of money but the spending habits do not correlate to the amount they have and the people who have way less money and they qualify for very huge loans. You talked about Mamambogas and at your combat and other informal or MSCs. So they usually, if they have very good spending habits or saving habits, they can get access to a lot of finance or money in terms of banking. So those are the things that you look at. And we tend to advise clients on how to mitigate this and how to help them get into this. So with the rule for instance, you can allocate like 1% or 1 to 5% of the money that came in as a retention value. So now the account becomes, they can be able to correlate with how you are able to retain your money. So it becomes easier to get facilities. All right, interesting as well. Now, I'd also like you to tell us, for example, a person who's earning, let's say 50,000, how can they ensure they retain that money to a point they're not going above it or little below it either. But I think it's good to go below it. I'd like to hear your point on that one as well. And then maybe a person who's earning a million, like what should be the expenditure plan or schedule for instance? I think in terms of money, I don't think the value or we may use the stationary term, the quantity of money that you have on earnings, should determine how you should spend. How you should spend is based on your lifestyle and how you plan your lifestyle. It's not about the amount of money, it's the lifestyle, the life you need, quality of life. Yes, interesting. So you may get, for instance, as you give an example, a person earning 50,000, they may say the money is too little, I can't get to work maybe by 20th and I'll speed on fast. I can't get my shopping right, I need to send something home and need, I need, I need. So there are so many so-called needs. There's emergencies along the way, remember? Yes. And you talked about emergency funds, you will talk about that as well. But remember, it is not the need, the need I need. There's needs and there's wants and there's savings. So just need to go back to that drawing board again. So at 50K, you realize that this particular point you can't do really much, but you need to split this with the wants and the needs and the savings. And then again, in the savings, other than just putting money aside, you can use part of that money to improve your life in terms of getting higher education, saving for higher education, saving for a better cause, saving for a course that will teach you how to do a passive income, a passive activity that raise passive income that would not affect your current active job. So these, again, will increase your savings and increase your activities therein. So you can be able to gain more from the 50K, probably to 100. The major thing that is a drawback is people talk about is pay or tax or to speak. So from the savings perspective, the aspects that you can do, like for instance, are selling about the unit trusts. These aspects, they can actually be able to cushion you on this. Because if you look at maybe like a life insurance, there's a tax rebate on that. So the more you save, the more tax rebate you get from the government and then more you have more spending amounts on your end. So the guy with the million Bob, probably it was not instant, it was again from the 50K. Again, if you win a lottery, you don't just spend it all, you still follow the rules and ensure that you're frugal in your spending. Not mean, but frugal. So that now you ensure that everything is taken care of, but everything, I mean, maybe you're paying your mortgages, you're paying your school fees, you're paying your car loan. Again, you're sending enough money home or you're taking care of your family. At the same time, you're putting money aside for your retirement and medical. And continuously funds. Right. Thank you for that. You reminded me of something that we asked the youth, the millennials, we talk about having a steady flow of income. You know, wait until I'm financially stable. Is there anything like that by the way that having a steady flow of income and financially stable, is there anything like that? Again, it goes to the quality of life that one is looking at. At the same time, we look at various ways that one can be able to focus on. Unfortunately, the answer to that question is there's no time you will say that you're financially stable. So let's say you own a house and have a car or two. Again, you own a bigger house, you have your kids, now you have maybe grown kids, they want to go to a better school, they want to go abroad. So you'll never be stable, so to speak. So the stability all depends on how you lay down your needs and wants and again on savings. It still goes down to those basics. In the plan now. Yes, so if it works within the plan, you are perfect. If you spend more on the savings and you don't have food, you'll go back to the savings and take away the savings. So the best thing is to understand where you are and the direction that you're headed and understand that you can be able to grow your income. Maybe adding up on another positive income as well so that you can be able to add more income on your plate. Right, yes. There's a place I was reading and they were saying if you're fancy and above with your money, you should have at least two streams of income and you mentioned positive income. Now in relation to that, even in our country as well, we have, it's called debt crisis. It's like we're living on debt. Is it possible for us as a country and always narrow it down to an individual to like just live a debt-free life where you don't owe anyone, no bank, no digital money lending system and all of that. In as much as years, we want to have these SMEs. They need funding and somebody also mentioned that even the biggest businesses are surviving on debt. It's debt servicing. Talk about that as well. Debt is interesting. What I mean by interesting is let's go back to how you create money. Banks create money by giving you loans so that now you pay back in interest. Where does this money come from? When it comes from deposit that you're putting in the bank. So the bank looks at your deposit as liabilities or rather debt. Liabilities? Yes. Deposits? Yes, deposit at debt. Because they need to pay you a certain interest at the end of the year. This is debt. They owe you this money. They have borrowed, so to speak, this money. From you? From you. So when now another borrower comes and they issue the money, the income they gain from that interest is called interest income. Oh, interest income. Or on the end, it's assets. To the bank now? Yes. So that's why on the banking side, when you get your statement, it's opposite. Where you think it's your deposit, it's a credit. Because the bank views you as a liability. As a liability. Bro, that's bad news. No, that's good news for you because you earn interest. But you're a liability already? No, not really. The bank views you as a liability. Well, liability means you are an expense. So again, what do you deal with people who owe you money? You call them up, you talk to them nicely. That's what the bank does to you. You have no time to call you up. You have deposits that are looking nice. Please stop up, ETC, ETC, ETC. They are always on you to ensure that you are comfortable. You don't withdraw your money to get to another bank. So these are aspects that move around the debt issue. So to speak, debt is not bad, but bad debt is bad. Please explain that bad debt is bad. Like, how bad is a bad debt? For example, I don't know. We owe more than 10 trillion Kenyan shillings to our lenders, including China as well. China is one of our biggest debtors, including the IMF. I don't know if we owe the IMF, but our debt is really... We would say it's bad debt, I'm sure. What's your opinion on that? It just goes down to the numbers. Of course, everyone wants to have cheap debt or no debt at all. So high collateral debt is expensive. High collateral debt is not something you want to look at. It affects other things like inflation. So the country or the government may prefer to go to such institutions or rather external borrowing other than internal borrowing. Because internal borrowing will foster more inflation, which is bad for us. We're experiencing it right now, right? Yes. In fact, it's both internal and external now for the country. Yes. So the government is usually trying as much as possible to have external debt instead of internal debt. Because when you borrow internally, how do the government borrow internally? They have treasury bonds, T-bills, and these are flooded by the CBK or the treasury. And when this happens, if they borrow so much internally, their rates go higher. So they're usually seen as very safe investment portfolios for one to have. So if you look at something that is about 9 close to 11%, that's really, really high on a treasury bill. So this translates to banking. Because in the bank, they would rather buy those T-bills than give you money because they're sure the government will pay. That's the money you're going to pay. So when your end is going to happen, they're going to increase their rates to you so that now they can put that risk instead of giving the money to the government, they give the money to you. So that fosters inflation. That's why now the money becomes expensive. Getting loans up to 18%, 20%. Currently, we have about three banks now that have to go ahead to have risk-based pricing on loans. So we are looking at higher interest rates coming up very, very soon. So this, again, is bad for inflation. So international debt, so to speak, or external debt, is not something to look up to. By the same time, it is necessary to ensure that certain elements and infrastructure are taking place. So the only aspect is to ensure that it is well manageable in areas that you can be able to prepare. On that note, how can a person, I'm trying to find the right word in my mind, how can you, let's say, manage debt individually? Well, like managing debt, well, effectively. And literally now breaking away from it, like not living in debt kept, kept, kept, kept. Is it possible to like, for example, you borrowed, let's say you borrowed $5 million and then you tried to buy Shamba and then it came to a place, at all costs, I couldn't afford it. But now it's like, now you're a slave, you owe whoever you owe the money to. How can you manage it effectively to a point is not now detrimental to any other flow of income that you have? Debt crisis, personal debt crisis is a huge, huge, huge problem. And when you're looking at debt crisis, you're looking at ways and means that you can be able to reduce this. And sometimes it is not as easy as said than done. So you look at the entire figure, how you are, and then you look at income streams that can come in place. And then you start scheduling based on high priority to lowest priority, so to speak. And then you go back to your table. You need to reduce on your wants because needs really, there's nothing you can do about it. You can't stay without water or food. Is it possible for someone to have expensive needs? Like your needs are so expensive, they are almost translating to wants. Do you have to cut it down? Yes, that's the conversation. You need to understand what are your needs and what are your wants. And unfortunately, sometimes you need to make expensive decisions or heavy decisions. What I mean is, for instance, you're having a big car that is a Gazela and right now in debt, you need to downgrade either to a smaller car or maybe from three to one car. I mean, so you're losing the value of that car. Not really. By cutting back, you give yourself a chance to move back up faster and easier. Because now with debt, with bad debts, you can say at B, you cannot access to finance, you cannot start another business, you cannot be able to do these things. And that's why right now there's rise of so many microfinances, some are not governed. And that's why some of them get robbed because you are unbankable, so to speak, because you have very bad debt. So to ensure that does not take place, you cut back on your needs, on your expensive needs, and then push them to wants. And then now from the wants, you look at what you can let go. Then from there, now you can go back because a good example is when you have a medical crisis, you can easily go to bad debt. The emergency fund or something like that. Yes, because you can use it, you can entirely utilize it and it's over. They go back and now borrow against it, maybe a shamba or something and get into bad debt. So on such things, that's when you start cutting back and that is when you look at what works for you. All right, thank you, fantastic. Now let's switch gears a little bit to savings. The conversation should be on savings culture. We began in the mission to, for example, you're given 700,000 and all of a sudden you don't have it. Now in this generation of millennials, content creators, you want to impress literally because you're young, you're energetic and all that. Now, do you feel like we have a consistent pattern when it comes to financial literacy? And at what point should we start instilling this culture from our kids? I remember there was a time we had a conversation with a friend of mine and they were telling me, kids in Japan, as early as four years old, they're being taught how to create a keyboard, create a computer, algorithm. By the time they are mature, they are creating a company and employing other people. So it began at a very tender young age. Now, for us here in Africa, the culture is go to school, graduate, get a job, go get employed, start saving. But now how do you figure to that place that you know, yes, I'm employed or yes, I'm gonna start a business which we commonly know, I end up on the Shabia Sharaka with a part of job. How do you figure to a place that you know, you have a consistent serving pattern? That really starts from day one. By day one, I mean, as early as possible. You'd be surprised, there are so many families that instigate this in their kids. They ensure that their kids understand this. So how do you do this? There are some individuals and families and they give the kids certain goals. When they achieve certain goals, they get certain rewards. Now, when they get these rewards, they are shown the saving culture right from then. These rewards could be monetary, it could be sweets or presents. From that point is when you teach a child how to share, teach a child how to put something you can use tomorrow or the next day or a few days after. It starts from there. Then slowly as the kids age, you have seen some bring their kids to the bank and they open an account together. They show that this is what you do and they give them maybe 100 shillings or something. And then the kids come with their parents together and they bank. Those are small aspects or elements where the kids understand that actually you need to start saving. And to get rid of that aspect where when you get the money in share, it becomes very easy when you start from day one. Yes, if the child may be 100 shillings for instance and they want to buy sweets and popcorn, no, no, no, we need to put maybe 20 shillings aside. And then spend the 80 shillings on those things. So from the 80 shillings, now tell me again, now what do you think is really important? Is this or this? Do you really need this or do you want this? So you start getting that conversation really early in your life. And they should go back to again to schools. They should ensure that this is taught so that these individuals or groups, when they start early in their life and they get income, it becomes very easy for them to transition and ensure that they are free to go and not spend the rest. Right, interesting, thanks. Now for a young person who is trying to figure out life, you think so, you need money. Of course you need money. So as long as you're breathing in and out, you will need money. And those people who say, me I'll do anything for money, I don't care if it's gonna cost my soul or it's gonna cost me a person, if they have to go so that I get money, what would be your advice to someone who's watching and they want to have money? But of course the basics are get a job or start a business. Where do you pick up from scratching to that point now? Sometimes it's very difficult when you tell someone get a job and then they'll tell you, okay fine, give me that job. Sometimes you don't get home to the skills where to start looking for a job, for instance. A while back you used to look at newspapers, right now they are none or maybe they're few for starters. So where do you start? Those are the simple things, I think which is really important. And one fits all doesn't really work for everyone. And what aspects people say that need to work with what you like and how you like it to be done. Sometimes that works, but which platforms or which areas should you look at? There are various areas that people look at. There's LinkedIn which is right now quite autonomous. But autonomous I mean it is very diverse. Where you can get a lot of passive and still active or hybrid solutions or other jobs. So this is where you start. So from small things that's where you start and by identifying what is the gap and what you're really good at. That's where basically you start. Right, let's also now switch gears as well to the digital markets. And I'd also like you to talk about the digital one less now. Because we are in a generation of tech. Almost right now every kid who is in school they are being taught to be tech savvy. It's like among the first skills that you should have. Now in a generation where there's forex trading, people being scammed left, right and center. Oh, CG, I'm 12 years old with your boards. Oh, I compare 10,000, say easy, I tell you account, how do we actually manage this to a point that we have like now certified professionals and even investment platforms that for example, if I'm giving you 10,000 you'll be able to be accountable for that. Just in case maybe you're trading on my behalf. Because right now I understand banks are also regulating forex. There's banks that are actually coming to actually help or assist people or even they're also offering that. How can someone reach and hit that pinnacle off? You know having like it's professional, I'm doing it professionally, I'm not being scammed. I'm gonna get my money right and I'm gonna hold you accountable as well. Regulation is key and government institutions need to do their bit in terms of regulations to ensure the right institutions and companies are working on board on this to ensure that Kenyans don't get scammed. However as Kenyans research is a key element in doing this and there are so many ways one can be able to do research and sometimes it doesn't hurt to consult someone. Even consult your banker, consult your financial consultant, consult someone who is in that business. So they can be able to give you some advice on what works what doesn't work. Again. But how do you know decipher? Of course a financial consultant like you're a professional or you have the trust. You know you've gained the trust because you're a professional. How can someone decipher for a person but I'm sure it's possible for someone to work at the bank and scum someone. They'd be like no, they disappeared, they're no longer there. Is it possible for someone to like have a trusted professional to handle their business financially? Yes, there are institutions that actually work on that professionally. However, sometimes it is best to go the traditional way. Yes, we are modern, but it's best to go traditional for instance. If you pick elements like unit trusts or if it is forex you're going to banks or such elements, it is very easy to trace back. And if you look at companies or institutions that are publicly audited, it becomes very, very easy for you to know their trustworthiness and establish where they are. A good example, sometimes is not a good example. Let me give you an example. When you talk about liabilities, there are some clients who come on board and they want to put a good fixed deposit probably 100 on 50. And the question they ask, what's your portfolio? What's your value? What does your bank hold? How much does your bank hold? They don't want to put their money in elements or in institutions that can actually go down maybe in a year or two. So even them, for people who are coming to bank for about 150 million, they still ask those pertinent questions. They still go back to the audited statements. They still go back to the traditional way of ensuring that their money is safe. So at the same time, when you look at digital markets, they are, it's broad as well and there are so many elements. There's so many elements in terms of good elements or good channels that one can actually make good money and they should be well exploited. I think additionally, using certain instruments in banks can be able to shell view from cons. For instance, if you have a bank being an intermediary where the person offering the service, they're putting the money first and then you get assured that you get the money once the service is done, such instruments can be able to assist you in ensuring that this transaction is solid, this transaction cannot be a con. Right. Yes. Oh my goodness. I'm being told I have two minutes to wrap up, but I would have asked you about how can someone boost their credit score, but it's okay. Briefly talk about your business and what you do and just in case you're offering any services and also your financial consultancy services, how can a person reach out and get in touch with you? There's a number as well. Please share with us in a minute. Sure. So basically, I'm a financial consultant. I focus on working capital solutions where I showcase individuals and groups and companies on how to get working capital for the entities to move them and to foster their growth and their activities. So the best way to reach me is through social hurdles and through my phone numbers. Yeah, please. That's your camera. All right. So my phone number is 0726-800-594. And my social network Twitter is at Edie Masai, Instagram Edwin Masai, and Facebook at Edwin Masai. Yeah, please repeat the number once again. If you have issues to do with money, do you want to retain your money? You want to retain your salary? Ataka Maniki Dogo. If you want the tricks, please contact Edwin. Please say the number once again so that people can get it right. 0726-800-594. All right. Thank you so much, Edwin. I think we should have a part two of this conversation because it's an endless conversation. Sure. And I had so many questions. So we're going to take a very short break, but we'll be coming back with much more. We have been speaking to Edwin Masai Mishira, who is a financial consultant. I would really love to hear how you transition from working in the banking sector to now the business, but you tell us next time as well. And thank you so much for your insights and your time and for coming through. Thank you so much for having me. You're welcome. So we take a very short break. We come back with much more. Continue to interact with us on that hashtag Why In The Morning, Entrepreneurship Tuesday, at Y2 for 4 Channel, at Brian Soko 101, and at... Edwin Masai. Edwin Masai on Instagram, as well as Twitter and Facebook.