Money Mindset

[Music]

so let’s talk about money mindset

so i grew up with a wrong money mindset

financial ignorance was my best friend

and spending on personal gratifications

was the only money dream i had

the younger me had three wrong money

notions

firstly that you can only save and

invest

when you have a job secondly that

entrepreneurship

is only for a selected few and thirdly

that once you find a job it means a

finally attained financial freedom

clearly as financially mature

i want each one of you to be honest with

this simple question

what is your money mindset

the value of money is not entirely in

its amount

but also in the wisdom of its owner

this profound word of financial wisdom

was given to me by my grandmother

when i was just a fresh graduate at my

first job

in lamenting about how little i was

getting paid

grandma told me to say the amount i was

complaining about as a single young man

was what some other people were using to

manage their families

she challenged me to think how were they

managing

this conversation challenged my money

mindset which has shaped my life to date

so when you talk of man’s money mindset

this is simply the attitude that you

have about

finances it determines how you make key

financial decisions

in your life basically how you think

about money

an individual that is empowered with the

right information

has a positive mindset when it comes to

money

what we need to have a positive money

mindset

the first thing is financial

literacy allow me to burst two financial

literacy myths

the first one that financial literacy

is only for the rich the second one

that financial literacy is only for

people in the business of finance field

both of these notions are wrong do you

need to be rich

to know how to make a personal financial

statement

do you need to be a professional to

understand how to interpret your monthly

pay statement

do you need to be rich to know the

different types of insurance schemes

that can protect your financial

resources

we work hard every day to earn an income

why not arm yourselves with information

that can help you effectively use

the money that you work hard to have

many people have financial access for

example people in employment

but many people again lack financial

knowledge just like the bible scripture

my people perish for lack of knowledge

we need to embrace financial literacy

for our own benefits

no one is too young for financial

literacy i strongly feel we should be

incorporated in our zambian school

curriculum

our school system encourages students to

work hard

get a good career and later find a good

paying job

but that should not be the end of the

story

students need to be equipped with the

basic

financial knowledge

so that they would know and be well

equipped

mentally on how to use the income

they’ll be having

every month

we need a positive money mindset even

before

any source of income

so what is this financial literacy

it is basically a possession of a set of

skills or knowledge

that empowers each one of us

or enables each one of us to make

prudent

decisions with our financial resources

among the many factors both personal and

economical

that affects or hinders an individual

to attain financial freedom is financial

illiteracy and this is what we need to

critically

look at

allow me to share a few benefits of

financial literacy

number one it helps you

be aware of your financial position

let me ask each one of you this

interesting question

probably i’ll be the first person to ask

you this

what is your financial net worth

due to lack of financial knowledge most

people

think net worth is only associated with

the rich

yet each person each one of us

can make a personal financial statement

and know

our net worth so when we say a personal

financial statement this is simply a

document that outlines

your financial position at a particular

time based on your assets and

liabilities

i know it sounds technique could say a

personal financial statement

but let me try to teach you in less than

a minute how to make a personal

financial statement

it is basically a document that will

help you know your net worth

and your financial position at that

current time

because basically it is your assets

minus your liabilities giving you your

net worth

so because each person has assets each

person has liabilities

is it safe to conclude each person has a

net worth

so when you talk of assets in simple

definition

this is what you own

or anything you have that has a monetary

value

and liabilities on the other hand is

what you owe

further breaking down assets i would

give an example like

if you have a residential plot

land that is a tangible asset if you

have a farm that is also a tangible

asset

liabilities on there also there’s also

liquid assets

that is if you have any money in the

bank then you also have liabilities

that is anything that you owe any money

that you owe

people of bank loans loans with their

microfinance institutions

you all people all that comprises or

makes up

your liabilities so when you’re making a

basic

personal financial statement to

determine your net worth like i would

challenge you

do this immediately reach home with your

spouse collectively

or alone take a piece of paper

and write my personal financial

statement since you’re also

almost closing up the year write assets

and list down

all the assets that you have if you have

any land

if you have any farm if you have any

money in the bank

list all that or anything you have that

has a monetary value

against each asset put the current

market value

let’s say if you have a london key to it

you bought it at 25

what is the current market value today

if you were to sell it

so put that against that asset then on

a different piece of paper list down

your liabilities

this is any person that you owe any

money any bank loan that you have

any small microfinance loan that you

have listed down

get the some value of your assets in the

sum value of your

liabilities once you subtract that will

give you

your net worth it doesn’t matter if it

is a negative

or positive what is important is that

you know your current net worth

that will help you know how to perfectly

work

on your financial situation because if

it is a negative thing certainly you

know

you have to reduce on your liabilities

and work more on your assets

so this information can only come with

financial literacy

that’s the benefit of financial

education less than a minute i think

i’ve tried

to put in some the second benefit of

financial literacy

it helps you avoid financial traps

barack obama once said under quote if

you think education is expensive

wait and see how expensive ignorance is

and of course financial ignorance

can cost you a lot of money

there are a lot of unscrupulous people

out there on a mission

to swindle people off their hard end

income

and i’ll talk about uh and i’ll give an

example of

investment currently i think we have uh

this business activity which is

mushrooming almost everywhere

network marketing there’s also ponzi

schemes

these two seem almost the same but

they’re different

one is legal in zambia the other one is

illegal

and that is a ponzi scheme now mostly

people who are

victims of these unscrupulous people are

people who are financially

illiterate let me try to explain how a

ponzi scheme works which is illegal by

the way in zambia

i’ll come to you and say give me a

thousand

after seven days i’ll give you fifty

percent of that money

which is a five hundred you give it a

benefit of doubt never nevertheless

you still invest whilst you’re waiting

for seven days to mature i’m still

approaching other people with the same

message

when those people also invest i’ll give

you the money

from what i got from other investors

and the process will continue once you

successfully get your money for two

three four

five times you’re going to spread the

news to your colleagues your family and

everybody will be coming on board

and due to seem like everything is going

on fine people

have so much faith in the system that

some people go as far as going to the

bank

get a loan and invest in the ponzi

scheme

one thing is for sure sooner or later

the system

always crashes either

the person in charge will choose to

withdraw the money and run away

or people will start to stop adding

other people

such that there will be no funds to fund

the system

if you’re financially literate you have

a sound

mind you will know the difference

between a fake

investment choice compared to an

original investment choice

the third benefit of financial literacy

i’ll share probably the last on this

part

is it helps you

know your financial position like i’ve

said but become

also become financially responsible

and be in control over your finances

one of the indicators of poor money

management

is a chain of dates

once you have date it is difficult even

to make a budget because every single

income you’re going to have

you’re going to channel it to paying off

a running

date i’ll give a scenario

of two families we have mr and mrs banda

in in a home where mr banda works is a

former employee

but mrs banda is just a housewife his

net pay is five thousand

before the end of the month mrs banda is

tempted

somebody selling carpets is 1500

but there’s something sweet about it

because you have to pay in three months

so she’s like three months i can still

pay 500 500 she’ll get

before the end of the same week she’ll

find somebody

selling nice bed sheets they also be

going at

five hundred you pay in three months

she’ll get so mr mrs

banda alone has accumulated a date to

pay attention of the month of one

thousand

mr banda also at the other hand his

phone

screen is damaged he has a colleague who

sells phone

painting instruments he also gets the

phone to start paying 700 watch at the

end of the month

mr banda also likes during the weekend

to go and refreshing up with the folks

but because he doesn’t have money over

that weekend he chooses to

because he knows the bank uh the bar

owner he chooses

to clinch a deal they write whatever

billing cards

and to come and pay at the end of the

month and

the bill is about 700 quarter

so mr and mrs banda before the month

even comes

they have a date to sort out of 2 500

that is half of what mr banda gets

so that would be not enough to cut

for the monthly budget so in other words

he’s going to be forced to go to the

bank or to any microfinance

and get a loan which will further affect

his budgeting and his money management

and this is how a chain of dates starts

once you become a frequent visitor to

money lenders

it is a signal that you are losing

control

over your own money or finances

on the other hand we have mr mrs walia

the same situation

is the only one who’s working the wife

is not working but he knows

together because they are financially

literate they have a standard on how

much they can borrow every month

every month they save for emergencies

200

watcher and because the message

eventually don’t happen every day

by that time they even have about a

thousand in the bank account

and missed mr warrior has also empowered

the wife with a small business capital

such that she can help with the

day-to-day

family expenses so here we have two

families

one is financially illiterate and one

the other is financially literate

and you can tell the difference in how

they they run

their homes this shows the importance

of being exposed to financial knowledge

with these few benefits shared it is

safe to say

financial literacy is a necessity

and not a privilege for only a few

we all need to learn how to manage

our finances whether you are a lawyer

you are a doctor you are a nurse or an

engineer you all work for money

why not arm yourselves with information

on how to effectively

use this money i’ll challenge you

to take it up to spread financial

literacy

men as well have a drink with your

friends try to throw in a conversation

about the inflation

some people they don’t even know what

those numbers mean

it doesn’t take a genius or somebody to

go to a business school to know what it

means when you say

inflation is 10 percent we need these

things to be normal in our conversations

women as you chat with your friends talk

about the current food basket in your

town or respective city

this will help people be financially

aware even as they spend

we need these parents deliberately

for those who have children or in

tertiary education instead of sending

that russian fee or

tuition fee and russian money in cuatro

deliberately send it in a foreign

currency

start teaching your children about

foreign exchange this is the time to

know all those things

it doesn’t take somebody to be in

business school

we need these things to be part of our

everyday life

okay coming back to this piece of paper

what is this this is probably what we

call money

but i’ll challenge you with something

everyone works for money everybody wants

to have this

but how well do you know this piece of

paper

can you easily tell a fake banknote from

a real banknote

apart from the ego and the freedom

statue what features can

really help you know this is the real

money

if you are blindfolded because this has

features even for blind people

so if you say you work hard for money

how much do you know about this piece of

paper

thank you