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