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| Image of Interior design by Celia Sawyer |
"Never be foolish enough to quit your job without establishing a passive income or alternative source of income." - Dev Gadhvi
I was raised in a typical middle-class family, where my father, a retired primary school teacher, and my mother, a retired small-scale fish trader, successfully supported six children with their modest income. Despite not enjoying a life of opulence and comfort, we never lacked life's necessities. Our upbringing was characterized by love, discipline, and Christian values, anchored by our parents' mutual love and respect.
One thing I failed to learn from my father was his financial discipline. Despite his almost negative payslip, resulting from numerous loans for our education, building a home, and investing in rentals for passive income, he managed his finances wisely.
During my tenure with an international humanitarian non-governmental organization, where I dedicated over a decade of service, my salary was far from meager, allowing me to maintain a comfortable lifestyle. However, I lacked respect for money, and my relationship with it was strained. Despite upfront deductions for the employer's provident fund scheme and the SACCO, I failed to manage my net income wisely, leading to monthly expenses consistently exceeding my income. This forced me into perpetual debt to cover the deficit, creating a cycle of living beyond my means, paycheck after paycheck.
Lack of financial literacy and failure to follow good business practices, such as seeking the assistance of a financial advisor and a business mentor, were the reasons I made the mistake of spending money without a stable income. This ultimately resulted in financial ruin after six months while attempting to establish the business.
Here are some of the mistakes I committed:
Mistake #1: Quitting My Job Prematurely: I resigned from my job before establishing a sufficient passive income capable of generating money even while I slept. Consequently, the savings initially set aside for the business were diverted towards covering daily living expenses.
Mistake #2: Lack of Frugality: Instead of adopting a frugal approach, I made an unwise decision to maintain my previous lifestyle as if I were still earning a salary.
Mistake #3: Upgrading Living Conditions: I upgraded my living conditions instead of downsizing, moving from a two-bedroom rental apartment to a three-bedroom one simply because I liked the elevator in that building.
Mistake #4: Unnecessary Vehicle Upgrade: I sold my fuel-efficient 1300cc car and added funds to purchase a fuel guzzler solely because I had always desired to drive that model.
Mistake #5: Extravagant Home Makeovers: I indulged in unnecessary home makeovers, such as changing furniture and adding electronics.
Mistake #6: Simultaneous Business Ventures: I attempted to initiate five businesses simultaneously, competing with numerous business ideas swirling in my head.
I strained and mishandled the money I had, and it retaliated ruthlessly, leading to financial hardship. The silver lining in all of this is that running the business provided me with hands-on business and financial skills, allowing me to reflect on and acknowledge my mistakes. Making mistakes helps us discover who we are and why we are here. While everyone experiences setbacks, what truly matters is how we pick ourselves up and learn from our mistakes, fostering growth and resilience.
Here's what I could have done differently:
Lesson #1: Diverse Investments: Instead of solely relying on self-financing my businesses without external funding, I could have invested 75% of my savings in a diverse portfolio, including T-bonds, T-Bills, Mutual funds, Annuity, Content Development, and Real Estate. This way, I could have earned an income for daily living while building my business.
Lesson #2: Lifestyle Downgrade: A significant portion of the money set aside for business was consumed by daily living expenses. Downgrading my lifestyle, such as moving to a lower-rent house or building a semi-permanent house on my land, would have been a wise move.
Lesson #3: Car Investment: Upgrading my car increased servicing and maintenance expenses threefold, depleting my funds. Instead, I could have sold the old car and invested the money in the business or a passive income venture. Alternatively, converting my car into a mobile office could have saved on business rent.
Lesson #4: Strategic Business Plan: Starting five ventures simultaneously was due to a lack of a clear strategy. Implementing a strong business plan would have guided my actions, treating any money injected into the business as a loan to be refunded.
Lesson #5: Risk Analysis and Market Research: My passion and overzealousness blinded me to identify and analyze the risks associated with start-ups. I overlooked crucial elements such as market research, customer discovery, and validation. This exercise would have helped me assess whether to quit my job or hold on a little longer.
Lesson #6: Financial Literacy and Job Management: Managing my job while building parallel income streams around my passion would have been a smarter approach. Being financially literate, I could have quit my job only after ensuring emergency savings equivalent to six months' daily living expenses, a solid net worth, and passive income from multiple sources were in place.
All is not lost; at times, we need to create chaos to discover who we are and why we're here. We all face setbacks, but what truly matters is how we rise, learn from our mistakes, and grow stronger. Having absorbed valuable lessons, I've invested my resources by actively acquiring business management, investment, and financial literacy skills through experimentation, experience, and participation in various entrepreneurship and business masterclasses over the past three years.
With the current level of financial literacy I possess, I am confident that if I had the same sum of money that landed in my account in 2016, I would approach things differently towards achieving success.
Paradoxically, if I had not quit my job, I would still be languishing in a life of mediocrity, stagnating in my professional and personal development while watching inflation erode the value of my lifelong savings. Although losing the money dealt me harsh life blows, I emerged from it shining bright like a diamond.
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