#360Mentor is a continuation of the #40DayMentor series. In this episode, Robert Kabushenga (RK) speaks to Grace Makoko (GM) on Taming Personal Finance.
RK: Grace, it is good to have you back on #360Mentor
GM: Thank you for the invite, Robert.
RK: I will start with the very basic question, Grace. Why is it important for people to plan their finances?
GM: What I will say is that finances are not any different from other aspects of our lives. You see it particularly when it comes to people and their kids. When something is important to you, you plan. I have never seen a parent who knows that their child is going to S1 and they wait for the announcement of the selection day to think of the school that the child will go to, because it is important. Or even when you’re going to sit an exam you prepare. Finances are not different. Because it is important.
Many people get to retire not financially ready. Statistics show that 5% of people retire financially independent because we don’t give it importance. When our words are not in sync with our actions, that’s what happens. We say our finances are important yet we don’t do the action yet we plan for every major event in our lives. You plan for your confirmation, kwanjula, Christmas name it. But when it comes to our finances, for some reason, we don’t see it as that important. It is something that was overlooked whether in the education system or culture. It is more important than all the functions we plan for. Maybe it is a question of expectations. We somehow think things will just work out or walk into it. It’s not like that. We don’t have the culture, maybe we lost it.
RK: Why do you say it is the most important thing?
GM: One, there is a verse in the bible that says money answers all things. Because we don’t perceive how important money is. For one, I cannot keep company with people who say “si ka sente” because they agree going to derail me. Money is at the centre of things. It is what moves things. It is no longer produced as was the case in the barter trade. It is a medium of exchange. It is at the centre of everything we do. There are so many things we put on hold because money is important and yet some of them are urgent. When you realise how central money is, when you hear statements like money speaks… he who holds the pursestrings is the CEO.
RK: As my friends say, “where money beats, it softens”
GM: And you have seen Robert, you can have the best idea in the room. But no one in the room will listen to you. Then you see a lumpen with money, with no idea and everyone is giving them all the attention and praise but because they have the money… Money is central to every decision that we are going to make at every stage in your day. And because of that, you better get the money question right. From the time you wake up, the next thing you are going to do has money involved.
RK: How did you arrive at this conclusion?
GM: I grew up with my dad being the kingpin in the clan. He was the tent pillar. He had been blessed with wisdom. He was a mover and a shaker. He was part of the Obote regime. One day when Museveni came to power, I saw my dad lose his power and his voice. Because he couldn’t find all the things he could do with money. Seeing him fall from that place of high status, to almost a pauper who no one listened to. He was a Mutooro and everyone addressed him by his mpako. No one would dare say his name. everyone called him Awooli. In a few years, everyone was calling him by his surname.
And it really had an impact. He couldn’t open the doors he could before for us. When he was part of the regime, he could get you into any school, get you any job. He had access. And all that changed. The thing that brought all that change was a four letter word; cash. The absence of cash.
We were living a privileged life. We were loaded. What people used to call luxury, he called necessity. He used to tell us “education is not a luxury, it’s a right.” We are bahima, we have to drink milk and eat beef. All that changed. He had to use a taxi, and for me that was the hardest part. Dad was chauffeur driven. We had many cars in the compound. He used to fly business class. To see him reduced to a taxi and conductors telling him; ‘muzeyi semberayo’. Daddy was a chain smoker. He got throat cancer and he never pulled it off. There was a time he jumped the queue and they had to send him back. He was lucky a senior nurse noticed him and called him back. But just seeing that change in status because you cannot back up anything with money, it deeply influenced me.
When I started working, I always reminded myself that daddy’s story is not my story. It will not happen to me. It will not happen to my kids. I had a rare focus that was going to be different for me through focus. I had a rare attention. I decided that this does not happen to me. I knew daddy had had access to money and to resources. If he had planned better, if he had stored up for winter in summer, if he had saved up and invested. Because not everyone who was in Obote’s regime went to zero. We saw people who recovered. But I think my daddy never made that transition. I was determined that would not happen to me or my kids. That gave me the determination that when I leave work, my lifestyle will not change because of my employment status.
RK: What tools, methods did you develop that guided you?
GM: Wealth creation operates on an agricultural paradigm. I will explain. Many of us in the middle class operate on a mechanical paradigm. When your car breaks down, you call your mechanic and he comes and tells you it’s the radiator and he fixes that and the car runs again. That is how many of us are operating our finances, on a mechanical paradigm. You have more month than money. You get paid on the 30th November and by 10th December, you have run out of money. You go to your bank and they fix that problem with a loan. You get a mechanical solution to that gap. You go to your friends you borrow and sort out that problem. We sort of hope along using that paradigm. However, wealth creation operates on an agricultural paradigm. A farmer cannot afford to operate like that. He knows that in Uganda we have two rainy seasons; April and September. The sun is overhead at the equator in March and September and the rains come. The farmer ploughs before the rains, then plants when the rains come. He will then weed, then prune and harvest. It is a clear step by step. He cannot say, this has failed, let me go and plug it here. He cannot borrow to fix a process. If he has not ploughed, he cannot plant. If he has not planted, he can’t water… it is a step by step.
RK: Specific and intentional exercise.
GM: Yes. If he cannot plough, then it means the entire process has failed. If you don’t harvest, the next rains will come and find the food and they will rot. It is a clear agricultural paradigm that you are operating in. It is what the bible calls precept upon precept. Line upon line. You grow wealth on an agricultural paradigm. The problem with the middle class, they want to grow wealth on a mechanical paradigm; there is a problem and you fix it. You hear that avocado is good, you borrow money and invest in it and do telephone farming. That is a mechanical paradigm, it does not follow a step by step process and that is why we are finding ourselves where we are. We want shortcuts. We want to do deals and not business. business operates on an agricultural paradigm. You make mistakes and learn from them. You go step by step. When you talk to the established businessmen, they took their time to grow. They did not wake up one day and left.
RK: It is what is called organic growth.
GM: That is the word. So as long as we are operating in a mechanical paradigm with that mindset, we will never create wealth. Because wealth comes from an agricultural paradigm; step by step. And you don’t jump steps. You plough, you sew, you water, you weed, you prune and then harvest.
Robert, the good thing is that you are a farmer, when you are choosing a good crop to plant, you choose the best. I used to see my grandmother, whenever she was harvesting maize, the best maize is the one she would put aside for planting.
RK: For coffee, if you don’t get the best planting material, your yield will be bad.
GM: Thank you. For coffee, you get the best. If it is groundnuts, the ones which are not good are the ones you put aside to pound for source.
RK: I will tell you how it works. We are always inspecting to get the best performing plants. That’s what you propagate for continuous growth. If you see that a particular stem is not performing well, you uproot it and bring one which is performing well and plant it. It is a continuous exercise of finding the best and repeating and growing it.
GM: Great. Let’s bring that closer to our lives. When you get your money, the first person you pay is the taxman. The best. The next goes to NSSF. Another best. Then you pay the banker loans. Also the best. Then you are left with the worst and you also expect to grow rich. You have genetically engineered a crop failure. If you plant the shrivelled groundnuts or coffee, you have genetically engineered crop failure. You have picked the worst and planted it. I used to live off 40% and save 60%. I was saving the best. Before you spend, you save. The best groundnuts are replanted. Get the best of your salary and put it somewhere where it will grow.
If you wait to first pay the loans and the taxes, and then whatever you are left with, you first spend and then save. You have genetically engineered a crop failure.
RK: Let’s agree. The taxman you have no choice. NSSF is saving for anyway. After tax, the rest is yours. What you are telling us is that we should plan for that deliberately.
GM: And we must take off the biggest chunk. Whatever is left after tax and NSSF, we must take off the biggest chunk. Take that as your best, the bulk of it. What we are doing is the opposite; eating the best and saving the worst. Worst equals the smallest bit and best equals to the biggest chunk. So you are getting what is best and you are going to parties, going abroad on holiday, contributing to all the graduation parties, looking after relatives, friends and well wishers. You want everything now. You are taking loans to buy cars and phones. You are eating the best. You are giving it away. Then when you are left with the worst of ugx 20,000, you remember to invest. That is why I am saying you have genetically engineered crop failure because you are planting the worst.
While if you got the best chunk of your money (where best is quantity), take off your best seed and sew it so that you can grow it. The bad one is what is left for eating. And you tell yourself, you have given the best. We are talking about taxes and NSSF but there are people who go into loans and are not taken with wisdom. You invested in something without any idea.
RK: Grace, let’s go step by step. You’re saying that when you are planning for next year, look at the total amount of what your total envelope is going to look like and the last thing you should consider is consumption.
GM: Yes. Priority should be to what is going towards what you are going to sew and invest.
RK: Let’s speak to reality. Many people already have debt. Some have dreams. There is a new phrase on social media that we should not look at every shilling as a bag of cement. But if you were sitting with me in the planning process, how would you coach me? That these are things that should be in my planning. In terms of timing, everyone is thinking of what they should do next year. What time frame should they look at?
GM: That is where I was going to start from. First of all, there is no farmer who begins to plough when the rains come. I always start writing my resolutions at the start of the year before. That gives me October and November to replan. It gives you time to edit. You could have forgotten that you were supposed to redo mummy’s roof. It gives you time. Try them and see that they fit so that by 1st January I have had three months of practice to see what will work and what won’t.
Sometimes we make resolutions at the spur of the moment but then you realise that it will be hard on you but you still carry it on. One of the reasons why people don’t meet their new year resolutions is because they are divorced from the reality of what it is going to take. For you to meet any new year resolution, it is easy to do and it is easy not to do. Robert, it is easy to save and not save at the same time. We gravitate towards not doing but we give ourselves those three months to clean yourself into that resolution.
RK: One of the things people struggle with especially when it comes to finance and health is personal discipline. Take me through, what are the rules of personal financing and how can people develop the discipline to stick by them?
GM: You have to know the driver. Let me use weight loss and I will turn it into money. To lose weight, you either do two things. Either you burn more than you consume or consume less than you burn. There is no other formula to that. It is that or both. It is said that if I have a week where I am not very busy, I’ll have to crank up my metabolism. I better sleep less because I won’t be able to burn it. Or if I have a week of partying, I better make sure that I burn more than I am burning. That is weight loss.
Finance is about spending less than you earn or earning more than you spend. It’s that simple. If I’m earning more that I spend, I will have more money left. If I am spending more than I earn, I am going to have balance. Understanding that is key. What is driving wealth creation is living below your means.
The other thing about meeting your resolutions is about the company you keep. Who your friends are determines whether you will be able to create wealth or not. Friends influence our money habits. So if your friends are spendthrifts, I don’t care how good you are, if you keep their company, it will soon come to pass. There are those people who just make you spend. Make an audit of the people whose company you keep.
I have close family, close friends, close associates who I make sure that once I am with them, I have no money on me because you are going to spend it. These are people who will say “ Grace, welumya nyo” and they are going to derail you. Because you are close to them, you schedule time with them. You space your time by seeing them. You make sure that when you are with them you don’t have money on you. The bible says “bad company corrupts good morals.” That’s why our parents used to ask us about our friends and their parents. You have to make an audit of yourself. Friends influence you more than you realise. I know that my friends are going to make all these comments but at the end of the day, they are going to come to me for loans.
Another thing Robert, just resolve that in 2022 you will not spend a penny until after seven days of thinking about it.
RK: Grace, please, come again.
GM: As long as someone is not bleeding to death, as long as it is not an emergency, resolve that you will not spend on anything until seven days when the problem shows its head.
RK: Let’s be realistic. There are things for which you already have commitment. You have bills to pay which cannot wait. Why should they wait for seven days?
GM: Because they can wait. Tell me, what will happen if you don’t power for seven days?
RK: Yaka will go off.
GM: And when it goes off, who will die?
RK: That is extreme, Grace.
GM: I know.
RK: It is the shock element. So you are telling us to question everything?
GM: Why am I telling you this, Robert? When we moved from the government house, we moved into a house with no ceiling, no floor, the walls were not plastered. No window pens. And we didn’t have three years. We could not afford to get power because it was three poles away.
RK: First wait. Give me a sense of perspective, where in Kampala were you staying?
GM: We were staying in Entebbe in a place called Kitubulu. The government house we were staying in was along Queens Road just next to the current Flight Motel in a middle class neighbourhood.
RK: And from there, you moved to a house without power.
GM: Yes. From flying business class. From being chauffeured. From shopping in Nairobi. From studying in International schools, we moved away from all that.
RK; That is why you are saying that all this stuff we think is necessary can be done away with?
GM: Absolutely. No one died, Robert. Daddy died later on after seven years but that was because of a broken heart. What I am saying is that you have convinced yourself that if yaka goes off you will die but apart from the things that will spoil in the fridge which would not have spoilt if the fried was not there. I am just using an extreme. If you don’t pay yaka for seven days, what will happen? Before you spend anything, postpone for seven years and see what will happen.
Those shoes, if you don’t buy them, what will happen. Sales people know that if they give you 48 hours to think, you will not buy. We buy on emotion not need. So you see someone hawking car chargers and you buy. But you don’t need them.
RK: My weakness is boiled gnuts. Once I see them, I lose balance. It’s the only thing that makes me lose balance.
GM: Anhaa. What I am saying is that yaka is not an impulse, by all means pay the yaka. That will help you to weed out impulses and the necessities.
RK: Grace, what you are saying is that people should consider controlling their buying impulses in 2022?
GM: Yes. I am giving you a practical suggestion that you can wait for seven days to see whether you will need it. It gives you the time to think better. When someone calls, wait seven days if they are not bleeding to death. If someone calls and says they are stuck, wait till seven days.
RK: If they are bleeding to death, by the time you get them the money, they will be bleeding to death anyway. There’s a lady I listened to about seven years ago. She used to be a loans officer and then she realised her clients were doing better than her. She decided that she wanted to go into enterprise. The first thing she did was not to touch her salary for six months. And she survived. Then she knew that she could survive on very much less. She has gone on to be a successful entrepreneur. I am re-enforcing that one of our resolutions should be sacrifice. And control your impulse. What else?
GM: One thing for me that helps me to make a difference is that I never make a financial decision when I am tired.
RK: That makes the two of us. I never take the decision when I am tired, hungry or ill.
GM: True, you make the suboptimal. You know better is the enemy of best. You make suboptimal decisions when you are tired. You are not thinking straight. In terms of reality, there is something called a focus illusion. When you focus on something, it magnifies. Don’t make decisions when you are tired.
In 2010, I made a resolution that I would be thinking about money every day. I take out an hour every day.
RK: What does that process entail?
GM: I will begin with our jobs. In a week we can spend about 40 hours thinking about our jobs, our employer, our JD and how to serve customers better. We do all this for our employer but not for ourselves. You never ask yourself what you will do for yourself. Warren Buffet says the reason why most people do not implement their ideas is because they don’t have time to think. We have so many job targets, friends and relatives giving us all sorts of programmes. Then we are on whatsapp abusing Museveni and the regime. Then we are consuming corona. Then there is football. You know all about all that and you never take time to think about money. I have grown to three hours every day. Pick a time which works for you. Whatever you do, set aside time and think about money. Saving is a second income, ask yourself where you can save money.
We had a guy who used to wash cars for us, and he would use a hosepipe. One day during my hour of thinking I was watching the car washing the cars and it occurred to me that we were using a lot of water. I asked him to use the buckets, and my water bill halved. Another time, I looked at the workers. I had two home staff. I cut off one and my domestic bill halved by 1/3.
In that one hour, I am always reading a book or watching something but it will be about money. I am not thinking about end times, demons, government, only money and how to make more.
When I was a head of department, I was heading the financial markets. The dealing room in banks used to close at 3pm. Together with my team, we would stop working at 4:30pm. We then talk about money. I went ahead and executed most of the ideas. Execution is one of my strengths. That is when we did the mathematics and realised real estate is a poor asset class in terms of returns. We would talk about money from 4:30 to 5: 30pm. People were into different businesses but I will tell you, it changed my life. That one hour.
Middle class has so much waste. It was during my one hour that I told my husband that we must shop in the morning market. Curfew messed up those things. There is an early morning market in Nakasero, Kalerwe and Busega. The produce is so cheap. You buy from the truck. You buy fresh produce. It cuts out on our expenditure at home.
We have a lot of waste in our life as well. We waste a lot of money on our lifestyle. We don’t need most of the things we have in our lives. When I was still living in Nairobi, there was this lady who came to talk to us from the New York Fashion Week. She shared some statistics with us and said we only wear 10% of our clothes. Middle class people have a lot of clothes.
That year, I resolved not to buy new clothes and I didn’t die. I use that one hour to get a promotion. There is a system for promotion at every workplace which is not part of the HR manual. And you have to work it out.
You have to understand what it takes for you to grow. You will never be able to figure that out if you are always on whatsapp. People, whatsapp is a time thief. before 4pm, you don’t see me on whatsapp. I worked out that the CEOs and EDs were all coming from one particular section in the corporate bank. I had to plan to go in.
One time a young lady came to me complaining that she was tired of being a receptionist. I told her being a receptionist; one thing you have is time and information. We sat by her desk for about ten minutes and in that time about four pregnant women passed by. I asked her whether she had noticed the opportunity there was in that. I told her in nine months, there will be a gap when they are away on maternity. When that person is away, you will get to sit in for them. The boss will notice you. When the person comes back, they will want to keep you.
At the reception, no one ever notices you. Those are the things we miss out on. I once wanted to take on an expatriate job and while in a meeting, my boss asked for someone to stand in for the treasurer in Cote d’ivoire, I offered. Never mind that I didn’t know French. I had a baby at that time. I only asked for an apartment, not a hotel. Long story short, they took me. I had worked out that if I wanted to be an expat, I had to try it out. That was in June 2010. By November the same year, I had been given the expat posting in Nairobi. I got this idea in my one hour of thinking of how to make more money.
Comrade Otoa: When you save, what do you do with that money? People will save for a long time, and when it comes to spending it, it goes so fast.
GM: First thing first. Never have idle money on your account. Only the middle class and the poor do that. Your money must be out there working for you. When people come to me for emergencies, I don’t have that money. Even heaven knows I don’t have it. I don’t emphasise saving as much as I emphasise investing. Invest your money in ventures that will give you a cash flow whatever it is. It must be working for you. When you don’t plan for your money, other people will help you plan for it and you will see it going away.
Recently, we have been asking for the president to sign the 20% of NSSF, you don’t know how many friends and relatives are planning for your money when it comes. You have to put that money to work. Now if you are going into a business you don’t know, the first five years, you are going to make mistakes. That will be the school fees to learn. Keep in your circle of competence but invest your money. Avoid having idle money on your account.
Joan Nkiriki: What do you do when your friends and relatives ask for emergencies?
GM: Those people have a plan. If you don’t give them, they will go to the next one. If you don’t give them the money, what consequences will it come with? Will you stop having fuel in your car or will you go without food.
Give it seven days. For wealth creation, it is whoo you have to become not what. You have to change what you think. In those seven days, you will have an idea of what you are going to say to them.
RK: That is some tough love, Grace.
GM: Yes. I have never seen anyone die because you have not helped them. They will just go to another person.
Apell Oceng: How do you keep the saving discipline sustainable?
GM: Brilliant. Apell, most of the middle class practice bad mathematics. You need to punish yourself in the prime of your life so that in your twilight years, you are relaxing. It is bad mathematics to splurge in the prime of your years and suffer when you are old.
I started working in 1995. I lived in austerity for the first 14 years of my working life. From the age of 22 when I started working till the age of 36, I was living in austerity. I believe that austerity is in times of plenty. I had seen daddy. He had not practiced austerity in his prime time. As he grew older, he was struggling. From 22-36, I was living under austerity. At 40, I didn’t have to work another day of my life. I am now in charge of my future.
Now when most of you think you are trees in your organisations you cannot be moved, I am away from all that.
RK: But being a tree, you can be chopped.
GM. Yes. It is bad mathematics when you say “don’t see abag of cement in every coin”. See a bag of cement in all your money up to 36 and then live your life. I didn’t go on holiday around that time, but now I can go anywhere with my husband. My time is mine. I make my own decisions and I have been doing that since I was 40. I am now 49. But I suffered in those first 14 years. No one can hold me now. You don’t know how many middle class people I talk to who hate their jobs, hate their bosses but they can’t live because of the insurance cover and fees for the children, incomplete house. And all that.
For me, seven years into work, I had a complete house in my name but I was using a taxi. The people around me were driving cars but on bank loans. I was using a taxi but I was the landlord. Daddy started off in big cars but ended up in a taxi. Told myself, it is better to start in a taxi and end in my own car than be like daddy. It is about mathematics when you spend your prime years when you can still take the pain to live large. Then when you are in your 50s, we see you struggling. That’s the balance I am talking about. You choose your time. My life is mine and now it has been paid off.
RK: I guess this is a culture you have passed on to your children.
GM: Yes. I don’t splurge on my children. I have taught my children that they should aspire to have things. For example, all my children don’t have more than four pairs of shoes. When children have to aspire for it, they start going for porn and all those bad things. But when my child’s birthday comes, they know they can aspire for something they don’t have. I have taught my children that it is more important how you finish than how you start. We have very many starters and few finishers.
I have a chef at home who cooks for me and their dad. They have to learn to make their own meals. When they get to where I am, they will have their own chefs.
RK: What would you like to leave with us, Grace?
GM: Be patient with yourself. Always ask yourself, how do I get to have the best out of myself. How do I get to learn about investment? How I get to spend less than I earn. All that and more but you cannot do that unless you know who you are.
RK: Thank you for spending time with us. We are better because of you.
GM: Thank you.
One thought on “Grace Makoko on Taming Personal Finances”
I hope I find a person who wishes to follow this golden advice with me. I hope some day my life gets changed because I practiced all this to the letter. I am starting first in the morning. Thank you nyabo.