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