5 things to do before turning 30 years old

[Sie]

5 things to do before turning 30 years old

Source: http://www.tanzaniafinancials.com/Newsletter/index.htm

1. Establish financial goals
Make a decision as to what you want and where you want to be in the future. Categorize financial goals into short, medium and long term. They can also be divided into needs and wants.

Examples of short-term goals
Buying a new car
Planning for your wedding
Going to graduate school

Examples of medium-term goals
Having children
Building a house
Starting a business

Examples of long-term goals
Saving for retirement
Building a vacation home (second, third homes etc)

2. Create an emergency fund
Determine how much funds will be needed to put aside as an emergency fund. It is recommended to set aside money equivalent to 3 to 6 months of living expenses. This is money that will come in handy in case of a financial emergency such as unexpected medical expenses or loss of a job.

3. Start investing
Step number 2 above should be completed before thinking about investing. Investing provides for additional income to supplement income earned through a salary or through regular savings accounts and helps start the process of wealth building.

4. Start saving for retirement
An average person will need approximately 70% of pre-retirement income to maintain the same standard of living after they stop working. For example if Samson (a single person) is currently earning Tshs. 500,000 per month he will need Tshs. 350,000 per month during retirement in order to maintain the same standard of living. Pension money alone is not enough to cover this need.
An average person will likely spend about one third (1/3) of their life in retirement.

5. Take calculated risks
Most investments do better when held over longer periods of time therefore start investing early (at a young age). Know your risk tolerance level. People in their 20s have more time to try new things and definitely more time to recover from mistakes compared to when one is older and surrounded with more responsibilities.

[Mariam]

...interestingly enough it comes from a TZ's media.

[Sie]

indeed...
How practical is it for Tanzania?

[Mariam]

yaani, hahaa, so unrealistic

[subi]

Sie,
Thanks for helping me make decisions and prioritize on my scattered plan. I (We) need this and similar inputs to help us plan better in life.
Thanks once again, it's such a good piece of information, knowledge and advice.

 

_________________
"Siasa si hasa, bali visa na mikasa"

[Sie]

anytime Subi...
But I was wondering at the same time Mariam, how about the weekly kiti moto spending done by many (young and old)... could this kind of money be channelled into something else...?

[Mariam]

[Sie]

I completely agree with you on some of the issues raised. We all know that our financial life is still on the works and we as a country are still a long way from attaining financial freedom but it is also true that at some point we’ll have to talk about strategies to change that… how about 45 years after our political independence… to start with…

My 2 cents… if those who have the ability to accumulate wealth… did so in a more organized way and minimized excessive spending on consumable goods while focusing more on savings and investment, maybe it will provide for the much needed employment and business opportunities for those of us who cannot YET accumulate wealth. I think (and economists can correct me if I am wrong) this is called the multiplier effect (in simplified terms)

Financial Planning Challenge:

Tshs. 50,000 x 52 x 7 = Tshs. 13,000,000 (52 weeks in a year, for 7 years - from graduation to 30 years of age). See point number 2 and 5 below…
This is a dream I know, that’s the whole point we all want to dream because dreams can come true

Here are a few facts that I know:

1. The article was from a newsletter (Work Smarter) for Young Professionals published by the website (www.tanzaniafinancials.com) and I would think it is targeting graduates who have jobs, hence Young Professionals…

2. Most young professionals get excited about starting a job and having their own money (anyone past 30 has been there) that they may forget about planning for the future. If someone can spend $50,000 a week at kitimoto it means there is excess money somewhere and the pay is good (this is real expenditure by real people) people have money…

3. Referring to the last point on the original article on taking risk, it is best to start planning (getting into the habit of it) before we start being surrounded by responsibilities such as family, tuition expenses, pocket money and the like that Mariam mentioned

4. Referring to Mariam’s point on most people being in a “state of emergency” I think point number 2 on the original article takes care of that, ”Establish an emergency fund”. Something is better than nothing. If 3 months worth of salary is too much I will put aside 1 month or 2, something…also refer to point number 3 on the original article…It is true this may not be possible for everyone but anyone who can, can try…

5. If you consider the school age of 7, most higher-education graduates would be about 23 years old when they start looking for a job or when they enter the workforce. If someone went to any other learning institution they would be even younger when they enter the workforce. This means the majority of us have at least 7 years before turning 30

6. This also means there are approximately 5 – 7 years before marriage and kids if someone is planning on having any

7. This could be the reason why before turning 30 might be the best time to start planning and putting things into perspective. I think the article started out by saying “make a decision as to what you want and where you want to be in the future” and gave out examples of goals.

Apparently, the site had conducted a survey a while back and these financial goal examples came from participant responses (not children of wealthy people but regular graduates/employees who depended on monthly salaries). These goals were their own.

8. The idea put forth in the article is to establish the goals and not necessarily attain all of them before 30… I reread the article and it seems each point is referring to or starting by either, Establish, Determine, Start and Take a step… Sounds like more of a “get-ready-n-go” rather than a “done deal”. That’s probably one of the reasons I think the article might be practical… what do you think? Because even in developed countries the majority cannot attain all these at 30 but it is a work in progress

9. I think the article gives a focal point, sort of a target because I know for me personally without a focal point it is hard to know where I should go… just like Subi said.

10. And don’t we always teach our kids that “They don’t know if they can until they have tried…?”

I started out thinking the same way… that maybe 30 years is too soon, but you know what, maybe not. Maybe it’s the best time ever considering what lies ahead past 30…

I doubt if this article is focusing on making us rich but rather on planning and managing the little resources that we have…

Revisiting the Challenge:
Tshs. 50,000 x 52 x 7 = Tshs. 13,000,000 (52 weeks in a year, for 7 years from graduation to 30 years)


Just my 2 cents...

[Sie]

major adjustment on the challenge... I had originally calculated the amount for 5 years and hence the Tshs.13m.

However the right amount is Tshs. 18,200,000 (in 7 years) if this dream can ever come true...

[Mariam]

Good persuasion, Sie! and this is what I have been saying all along, this article is a dream for now:-), and I agree it's good to talk about these things. I still think <30 years olds in TZ is still a wrong audience, it's putting too much pressure and can break people's hearts given that the majority really have nothing to start with or spare, may be should have been 6 things and one of them details how to get a job with examples of places they can go seek jobs, and may be talk about health or life insurance....Of course dreams are good, for one, they are free and second, can come true, but we should not forget also that there is a possibility that dreams may not come true and can forever be just that - dreams. Chances are especially greater in our Poor countries with poor financial products. Not to discourage anyone but we shouldn't set our hopes too high on dreams rather than the reality, remember the Abunuwas story?

...talking about 45 years after our political independence...I tell you! Our government has failed us, it shut down the ladder to the real Citizens! Had it worked hard to provide us with security, technology, financial services, infrastructure, markets, improved agricultural technology, social services such as health, education....I probably wouldn't be amused by this article today!

Back to our discussion, - we have to remember jobs in TZ are scarce, very few youngsters who get jobs before they are 30, at least for "regular citizens" who are the majority. The minimum wage was just Tsh 60,000 or probably 30,000 a month, doctors and few other professionals who are making Tsh 350,000 and above can be counted. How many people who can afford the Tsh 50,000 weekly on Kitimoto alone? I will not dispute that few are there, and they are probably the ones who can not even read either the newsletter (Work Smarter) or www.tanzaniafinancials.com and those who read are probably graduates who are yet to land a job and would probably appreciate to read real life examples fitting their environment and situation, at least to lift up their spirits.

Over there we don't have places like McDonalds or Starbucks or Hecht's someone can just go to work while pursuing their education or as interim job while seeking for a real career...My mentioning of the "State of Emergency" was to contrary with point #2 because over there people always have emergencies that they can't even handle that day, meaning they exhaust all options yet can't take care of the emergency. So advising them to save for tomorrow's emergency while they can't solve today's is just unrealistic. What am trying to say is people have plenty of responsibilities now while the future is uncertain. It's hard to advise someone to save for retirement while that person is not sure if she/he will reach the retirement age given the life expectancy is lower than the retirement age, how about advising them to invest in their health first and make sure they are in good health at 30 years old?

We should not forget, also, that we don't have the culture of selfishness that most people in developed nations exudes. People face difficulty choices, it's a constant struggle, with barely enough money to cover their daily needs sometimes can't afford to buy food. If the study was done in TZ some of examples which would make the cut would be:

1. How to improve educational opportunities for siblings to help them stand up on their feet, enrolling them into school and keep them there, (this will help you avoid a lifetime of helping them).

2. How to improve living conditions for your family to reduce cases of diseases and so on.

3. Why reductions in food intake, can lead to permanent disability and lasting impoverishment

4. List of strategies for managing and coping with risk in everyday life

5. Available ways to access insurance to lessen the blow when the worst happens

6. How to save in the form of human capital (by improving health, nutritional status, and education)

Reasons that I think this article was tailored for people in Developed nations (They) are:

1. They are the lucky ones with access to a range of financial tools such as accumulated richness in the family, guaranteed employment/business, loans, insurance, better saving tools and other financial products.

2. They are more resilient and better able to deal with everyday demand and other basic needs as a result their savings stay in tact and can afford making plans as mentioned.

3. They have less uncertainty while equipped with diverse financial services

4. They have good saving products, keep multiplying.

5. They can cope with sudden expenses associated with deaths, illnesses or loss of assets or jobs through Insurances (healthy/death/life/disability/unemployment insurances).

6. They can have simple loans that they can pay back rather than going and draining retirement money before they retire and be penalized.

7. They can just put a small amount of money down and get a new car loan to pay the remainder of the cost in installments or mortgage for that vacation home, unlike us, most people buy cars or build houses with cash money! Imagine a Young Professional saving for money to buy a new car!

8. They have services which provide a cushion when families need more money for seasonal expenses and in tough times.

9. The saving products available for us are very poor and many banks accept only certain types of customers and amounts.

10. Many saving institutions do not provide financial services that could help poor/lower income people ability to save...so even incentives that will make these young professional save are not there.

11. People in many areas of the developing world pay enormous transaction costs in their efforts to save.

11. Fluctuations in our incomes and the risks we face are too high for us to save the way the article educates.

12. Goals and examples given in the article are not realistic where financial conditions pose severe challenges to planning and saving. Life as a worker (Young Professional) is not reliable and it's financially frustrating.

13. Most professional also live from hand to mouth. Their savings are simply to maintain adequate consumption at the moment.

14. We save differently, we first break cycle of poverty over several generations, which can real create a positive ripple effect throughout the family and can help save thousands of lives.

15. We tend to support our extended families in needs such as food, school fees, housing, health care, business and so on. If you die before you retire:-) your happiness was to see how many people have moved forward because of you, rather than how much money you leave behind.

16. Merely advising people to save isn't going to cut it in a society where risk is familiar and high in everything.

Well, I do not necessarily disagree with the article but I still find the advise to be too theoretical for TZ, even for the "Young Professionals", Subi probably resides in Arizona:-), I think I read her biography in the old "Kforum" a while back if my memory serves me correctly. It's good to plan but we always look for attainable goals otherwise we are setting ourselves for a failure. You can not empower your child to pursue a PhD at the same time she/he is doing their secondary education, you encourage them on things you know are not too far from perimeters they are in, that's a recipe for failure and demoralizing an individual.

Thanks Sie for helping me to get organized! My ideas were all over the place before this

[Sie]

Very very interesting arguments Mariam! thank you.

If I could challenge you (please allow me...), what would you consider to be the 5 most important things to concentrate on... before turning 30?...assuming that the survey done for the original article had targeted a group which is representative of a small portion of the population.

This question is now on my mind:
What would the majority of the population consider to be the 5 HIGH priority things to do before turning 30?

We still need a plan that would work for most of us even if we don't have any income to work with right now, otherwise we wouldn't even know where to start, right?

A plan will also help us be prepared to use the income we earn after we secure a job or start a business etc. in a way that will help us and others Today as well as Tomorrow...

[Jonny]

I think the 5 things are....

1. Set goals for yourself
2. Plan for your goals....opportunity only favors those who can see or hear her knocking.
3.Work for your Goals. As efficiently as possible!
4. Enjoy/ appreciate & maintain your success....one to the reasons for planning your success is so you can enjoy it... squandering your success is not part of this.
5. Transfer your Success. ( unless you plan to bury it with you)

Not sure if all 5 are necessarily a list of things to be done before 30 but the earlier the better i guess.

Also it seems we are always emphasizing that people back home get jobs, even our educational system seems to mostly tailored that way. So who is going to create these jobs?
I think people's creative juices need to be squeezed out. Innovative societies are the ones that always prevail.

 

_________________
Opportunities are never lost, someone will take the ones you miss.

[subi]

As Sie said, this is a goal, a plan, one has to make it work for themselves with regard to their situation.

And as Mariam said, for those who can do what is advisable, need to be a practical example to others and show them that it can be done.

Some people learn by trying what they read, while others learn by seeing what has worked/not worked for others. If you are a Christian, you will remember that Jesus taught differently the two groups of people around his life. To the one group, i.e His disciples, he rarely used parables when teaching them. I compare this to what the "5 things to do before turning 30". To the other group i.e the multitudes, frequently, (if not all the time) Jesus taught them by using parables and examples. When He was asked by one of His disciples the reason for doing the teachings differently, He said ( I translate as I understood) "it is because we have different capabilities of absorbing and understanding things".

So, when Sie posted this article here, it gave me a focus. I do not earn a lot (well 'a lot' is a relative word) now but much better than then. I will cite my real life exampl here, this is as true as from Sept. 2003 - Nov. 2005. I used to work 5 days, 8 - 12 hrs a day in Tanzania. I was being paid between 80,000 - 200,000 Tsh a month. I still was able to save and help relatives with that much money. How did I do that? Did I had kick backs, NO. Did I had another source of income, NO. Did I steal NO. Did I receive bribe NO, did I at time give money as a bribe, YES (God forgive). But how did I do it, well, I am not a drinker, I do not smoke, I do not go out to party and have good time/relax just because a lot of my friends did that ( I agreed to be called anti-social in the group), it's not becaue I couln't do it, but I chose not to and I taught myself to agree and accept that as a normal life. (Call it sad life? boring life? well, not to me. Being at home doing other stuff makes me relax as well. I love doing what suits me, you have your choice and it doesn't have to be like everybody else) I didn't rent a house where I had to pay 50,000/month instead I lived in a 20,000/month room in Mwenge kwa Mzee Kassim. Now, I did all this not because somebody taught me, but I saw it OK for me to help others by limiting what is not a 'neccesity / basic need' (basic need? neccesity = relative words as well) in my life.

So, when Sie posted this article, you can understand why I thaked her for it. I had an idea, say, insight but couldn't focus on how to work it out. See, this article not only has helped me, but to three other e-groups that I forwaded it, I have received kuddos from members rating it as a 'good' piece of information. How useful it has been to them, I don't kow but since I can focus on what to do with the savings that I am trying to put down everytime I earn some money, I couldn't be happier, the article came in in just a perfect time.

This thing is very relative but still applicable to some Tanzanians if they were to lead a 'normal and okay' (again relative words, normal & okay)

And we must agree that, there is no one singl formula that could define thigs and how to work our problems in this world, therefore, while this may work to some, it may be a total nightmare to others and that is absolutely o.k. for "human beings are unique " - even if they were identical twins.

Mariam, you are right, I live in Phoenix, Arizona. I've been in the USA for almost 2ys now and I just started working here 9 months ago.

 

_________________
"Siasa si hasa, bali visa na mikasa"

[Sie]

I think in concept we all (Subi, Mariam, Jonny and I) agree that it is important to plan regardless of our situation.

What I have gathered from the discussion is that we may all need to go through these 5 stages in order to make things happen.

1. Planning – without this we wouldn’t know where we are or where we want to be at a point in the future. This will involve setting our priorities whether it is getting a job or buying a car…

2. Setting a time limit – this will motivate us to get started and keep going and help us determine when to evaluate our efforts to see if they have paid off. Whether it is 30 years or 40 we may need to personalize this to suit our needs but at the same time not forgetting that time will not stay still.

3. Strategizing – how are we going to make this plan work? What ways should we use in order to accomplish what we have planned for? Can we save? If so how much, when should we start and how should we allocate the savings? Here is another article on the same website that gives quick tips: Managing a savings plan: 17 simple tips to make it work

4. Getting it done – Getting down to work. Making it happen. Working on the planned strategies to accomplish what we planned.

5. Evaluation – Reviewing what we have done and determining if the goals were met

If we don’t manage to accomplish things as planned there is always an opportunity to review and start over because this process is more of a cycle it can go on several rounds in a lifetime.

Here is one tip I consider important in financial planning

Use the increase in salary to fund a specific goal in the plan.

This is true regardless of the individual income level.

Thank you, got to go now... this was enlightning

[Sie]

sorry here is the link to the article mentioned above:

Managing a savings plan: 17 simple tips to make it work
http://www.tanzaniafinancials.com/FINANCE/SavingsPlan/savings.htm