Why you suck at Personal Finance!

Why you suck at Personal Finance!


Okay I admit!If this was somekind of a doctorate essay, that title above would already earn me a straight “F”. Using the word “suck” in a supposedly formal conversation is really not professional. I know. But I have been sitting down here at my keyboard thinking of a better word to describe why educated professionals(sometimes even finance people) make the worst personal finance managers. Forgive me, but right now the word “Suck” describes it for me.

I have been opportune to facilitate sessions in and out of Nigeria on the subject of “managing your finance”, one image that has never failed to strike me is that of a professional (banker, doctor, lawyer etc) in front of me telling me of their woes when managing their finances. Interestingly, I can understand them very well because years ago, I was in their same exact situation. A Corporate Finance expert in the field of treasury, I was responsible for managing a huge portfolio in 15 currencies. I was very good at doing my job and I come highly recommended and I must add commended. But then, when it came to managing the small remuneration paid to me (in one currency), I was a total wreck. I could hardly wait for the month to end. Apart from the usual stack of bills waiting to be paid by month end, there was the usual counter-parties that show up. I’m referring to the groceries corner shop, the domestic staff that needed to be paid, the estate levies that suddenly becomes due and then the long lost forgotten relative who shows up needing help to pay his children’s school fees (aka Black Tax)…I wonder why they always knew the right time to come.

Why was I so successful in managing billions that wasn’t mine and a total failure when managing the crumbs that belonged to me? That question was the start of an adventure that took me on a ride from financial cancer to financial wellness. The lessons I learnt while trying to answer that question became the foundation of a message that has brought me before local and international audiences over the last 4 years.

There were three major things I found out that made me successful at work and not at home.

1.       You Need a Finance Tool: I realize I was very successful at my work because I had all the help I needed from Software’s. At the work place, there was a software for everything. There was a software for accounting, treasury, payroll, stock management, invoicing and logistics. Without these applications, we are basically useless. Imagine a bank teller, entering cash collections and withdrawals into a big exercise book? Did you just remember the days of Tally Numbers? Yes!


The sad reality is that while we have access to tools at work to help usin managing process in our organizations, we don’t have any at home. If I were to ask you what tools you use at home, a very small minority will say Microsoft Excel while the vast majority will say “Nothing”. It’s all managed in the head. Imagine if the multi-million dollar organization you presently work for was managed “in the head”. Your guess is as good as mine. It will be a total failure and you will probably be jobless by now.


So first things first, GET A TOOL!


2.       Value for Data: Now what do you think the software’s you use in your organization do? They collect data. They don’t just collect data, they collate them, process them and provide an output, based on a query that you the user initiate. Think about it, what do you do all day with the software at your disposal? You input data. Why do you input data?Because you know the organization values that data.


I was speaking once at a workshop when a young man in response to a comment I had made that people should be in the habit of keeping records of their expenses asked ‘so you mean I should be keeping records of even N20 of expenses?’ It was a question I knew echoed in the minds of many of the participants as well. As a typical Nigerian, I answered him with another question. ‘Has your bank ever forgotten to debit you with N5.00 VAT on debit charge for local transfers?’ The answer was No. So I concluded, if your bank which is a million times richer than you, will not make the mistake of forgetting to debit you for an immaterial amount like N5.00 you shouldn’t either.


The truth is that data is extremely important and without it, you are basically planning blind and running blind. You need data of your expenses and data of your incomes (including windfalls). These data will be inputted in tools (software’s) which will help you, collect, collate and process as per your query. So next time you go to the fuel station or your visit the local grocery store, make sure you collect your receipt and keep. Such simple book keeping is the difference between success and failure.


3.       The Power of a Singular Purpose – I wrote an interesting piece recently titled “Of Clubs, Managers and Nigerian Banks” where I compared Nigerian Banks with EPL clubs. You might want to check it out here http://www.canoncrested.com/of-clubs-managers-and-our-nigerian-banks/ if you are into the EPL like me (Up Gooner! – You can stop reading if you are a Chelsea fan…. Just Kidding). Anyway, the feedback from that article was how its analysis of the Nigerian Banks was so spot on. You see, when you work for an organization, you are usually not in doubt of the organizations vision, its goals and its objectives. Gucci will tell you that they are not in the business of selling bags but in the business of “Making people happy”. Every MTN staff knows that they are in the employ of the company to add to the corporate vision – Being the number 1 telecommunication company in Africa and the World.

The moment you as a Staff deviate from the singular vision of the organisation, you are out of the door and replaced with someone else who is focused on it. Ask yourself this question, What is my family goal or vision? Where do I want to be in the next 10 years? What drives me the most and how focused am I on it? An honest answer to these questions will immediately reveal how so “all over the place” you have been in terms of your vision, focus and goals. Truth is, your life and family is also an organization with you as the CEO or the Chairman in charge of steering the ship. If you are a husband or wife it’s time to sit down and decide, ‘what is our family’s goal, vision and focus for the next 5, 10, 15, and 20 years?’ Same applies if you are single.

Let me wrap this up here. Like many, I had read books. I had attended many seminars and even listened to plenty of sermons. I was very much enriched in the theology and theory of “Personal Finance”. However, I realized that knowing the principles is one thing, applying them is another. My take is that to apply those principles, you need all the help you can get with tools that are now available online. (like MoniWyse). You also need to develop a strong value for collection of data and match it with a singular vision and focus.

Would this result in automatic success? No! But it sure is a great place to start.

@yinkanubi (twitter)