How African millennials can change their economic narrative

[Music]

january 1st

2018 my life changed

a couple’s altercation the night before

dramatically brought

my four-year marriage to an end

and so i woke up in the new year a

28-year-old single mother to a toddler

carrying a six-figure debt

broke and broken is what my friends and

i

call this period of my life

it put me on a journey where i quite

literally

walked through fire in the process

i became debt free i learned habits and

principles that put me on a trajectory

to building wealth

i achieved tremendous personal growth

but more importantly it changed my

perception

of what my individual contribution to

the economic narrative of

africa can be you see africa

is in trouble economic wars

terrible health care lack of access to

education

corruption bad governance the list goes

on and on

and the most that you most of us would

do

is just sit back and complain

but what if i put it to you that the

simple action of you

taking control of your finances and

starting to build wealth

would actually positively contribute to

how africa is run

i’ll explain this in a bit but first let

me share a few statistics

the global average work life of a person

is 30 years

the eurostat survey of 2020 puts the

average work life of a european at 35.9

years

in africa the data is a little bit

sketchy but it is estimated that

africans spend about 40 years of their

lives

working this is because africans start

much earlier in their lives to

to actively contribute to the economy of

the household

and work much later into their

retirement to continue supporting

their families so i’m here to say

despite the negative connotations that

this

data gives for africa there’s a silver

lining

it tells us that africans actually work

hard

and it tells us that africans know how

to earn money

so if we could give them tools and

knowledge

to actively build wealth early on in

their lives

they could actually positively

contribute to the african narrative

which brings in the idea of fire

fire stands for financial independence

retire early it is a personal finance

model that’s

gained popularity around the 2010s and

obviously with the

growth of the internet and online

communities it has gained a lot of

traction among millennials and

generations

and generations eagers it is basically a

model

standing on two things first is to

aggressively save

and invest and then the second is

ruthlessly cutting out expenses

right here in zambia efire was lit

at the beginning of the global pandemic

i launched a platform called poised

investor

this is where young people millennials

and generations eagers right here in

africa can

go to find personal finance advice and

knowledge

on how they can start taking control of

their personal finances

and build wealth so it’s two ideas that

have been put together

the first is financial independence and

the second

is early retirement so let’s start with

financial independence

to be so financially secure that you’re

able to withstand

economic shocks the access to spaces and

privileges

that a less financially stable person

might not have

my favorite is the freedom to decide

when

where how and with whom you would like

to work

early retirement is basically to be so

economically sound that you’re able to

stop

actively working for an income this is

where your investments or your savings

are enough to sustain your everyday

economic needs

now it is understood that fire is not

one-size-fits-all

and over the past decade different

factions of the idea have grown

so i’m going to share four types of fire

that you

can target for the first

is traditional fire this is basically

where you’re

aiming to save and invest enough that

you can sustain

your current lifestyle remember with all

these types aggressively saving

and aggressively investing is a goal

the next would be fat fire this is the

type of fire that most of us think about

when you think about retirement

you want to live a luxurious life get on

a boat or buy a yacht somewhere and

travel the world

you could think of it as fire on

steroids

this is usually targeted for by high

income earners

or if you’re not a high income earner

but you want fat fire then you would

need to find alternative sources of

income

the next would be lean fire as you might

have guessed

it’s the opposite of fat fire you’re

aiming to live

a minimalist lifestyle in retirement

so in africa usually this is where

people who are working in the city say

i’m retiring i’m moving back to the

village

to live a simple life and the last one

is barista fire

this one targeted for mostly by young

people they want to retire in their 30s

and 40s

but then are aiming to work minimal

hours or minimal jobs to continue to

supplement their income in retirement

okay well fire has received some

criticisms

obviously people have mentioned how

usually when you start saving something

comes up an

aunt gets sick attire bursts and so on

and so forth

if you talk to any financial advisor

with the assault they will tell you that

the first step

to financial independence would be for

you

to start building your emergency fund

this is a fund that would cushion you

when things like an aren’t getting sick

or attire bursting um events

right and also

fire is not something which is like a

get quick

rich scheme it it will take dedication

it would take discipline and it would

take some sacrifices

so over time you will have to say some

hard nose

the second criticism that fire has

received is that it is for high

income earners only critics have

mentioned how it is hard for low-income

earners to actually have enough to save

up but remember fire is not

a concept for two years or three years

it is a long-term game we are talking

about

saving and investing for periods of 15

and 20 years so even if you’re saving

small amounts

every month or every week over a period

of 10 years 20 years

you would have built up enough of a fund

to

create wealth for yourself so three

things i want to mention

one yes you are building over time

that habit is going to grow for you so

you will learn the discipline to

consistently save small amounts

the second thing is it’s a time game

okay

so you’re saving and investing over 20

years

30 years means that even your small

amounts grow to a nice

lump sum principle and the third is

compounding effect

when you put away your money or you’re

invested it starts to earn interest and

the interest

has to earn interest and over time that

money starts working

hard to build your wealth for you

the third and final criticism that fire

usually gets

is that early retirees are not saving

and investing enough

and when they retire later on in their

lives they will not withstand economic

shocks

for the purposes of fire in africa we

are saying early retirement

is not about you stopping to work

completely

we are saying earn enough save enough

build wealth for you to stop

actively working to survive but then

pivot and start working in areas that

are impact or purpose driven

that way you will continue to contribute

positively to your communities

but also because you’re still earning an

income

you still have money coming in the

second thing is

your investments the income that you’re

getting from your investments will be

enough to sustain you

even in retirement the goal is not for

you to

actively live off your principle but for

you to

live off the returns that come in after

you have invested

okay so now we own we know about fire

i want you to take a moment and think

about what you would be doing

if you had all the money in the world

and you had all the time in the world

money was no longer a factor of you for

you to work

what would you spend your time doing

okay great was that enough time for you

to dream

okay i want to leave you with four

things

a few steps that you can take for you to

actually start your own fire journey

the first is to figure out your fire

number

how you do this is simple you find out

one month’s expenses

how much you spend okay every month

multiply that by 12 and then multiply

that by 25.

so crudely you would have established

what your goal is how much money you

need to save

and invest for you to be able to live

for 25 years

without ever having to work again simple

right

the next thing you can do is to

track your finances find out where does

your money come from and when i say

track your finances i’m not just talking

about your salaries

truck if you’re a young person those

gifts that you get from your uncles

extra jobs that you take track every

income that you have

into your household and then find out

where does your money go are you

spending too much on clothes are you

traveling too much

are the grocery budgets too large in

your household

so find out where your money goes the

third thing you would do

is dream around ways that you can

increase your income

but also look at those expenses that are

not very important to you

that you can cut out of your budget and

the last thing is to save

save something even right now in your

seats i can see a few people with

devices

push some money from your mobile wallet

into your bank account right now

in this way you would have started on

your own

fire journey and even if your goal was

not retirement

you would still be just a simple act of

you constantly saving and

investing back into our economy would

mean that you are contributing

positively to the african narrative

thank you

[Music]

you