How to tell one is financially successful

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By JOHN KARIUKI

People work hard, for ages, to meet their needs and accumulate wealth.

But as the years pass, they are not sure whether they have crossed the bridge to riches or not.

In fact, many people are too modest to accept that they no longer need to "struggle" for a daily meal, school fees or shelter.

In the Kenyan context, the very word — financial success — denotes some slice of wealth. Conventional wisdom has it that financial success is when one is able to honour his or her commitments.

People who promptly fulfill their financial obligations are often given goodwill and credit facilities owing to this perceived "clean" record. Their financial interactions with others can be profitable, swelling into further financial success.

The first parameter in gauging whether you have made it or not is by answering the fundamental question: Is your income more than your expenditure? This is the most important factor of measuring one’s financial success.

There are, however, instances when emergencies or personal mishaps may temporarily alter this equation. Invariably, people who consistently live way below their means get rich.

The second indicator of financial freedom is the prompt of payment of one’s liabilities. People with sober money plans anticipate all their obligations months ahead and are never caught off guard, say, by any outstanding school fees or rent.

When one conducts his or her money affairs in this manner, success will court with him or her. People on the way to riches owe no debts. Although mortgage financing, as well as wisely arranged business loans, can prove beneficial, personal borrowing is normally perceived a mistake. Clothes, furniture andvehicles that people with a plan own have no obligation.

Yet other people may appear prosperous behind newly financed cars, furniture and household items. Personal financial experts warn that this is the surest way to financial ruins.

The third indicator is the control of one’s current money conditions. Dwelling on past money mistakes and a distant future may not help one. It is only the present that affords one an opportunity to grapple with events and arrange favourable results like one’s child’s education, a mortgage and a business investment.

If one is regularly in control of his or her finances, he or she is never overwhelmed by every small problem. This is the way financial success.

The fourth parameter of measuring one’s financial success is the level of skepticism. There are many clueless people who are always driven by consumer uniformity. But wealthy people are skeptical and avoid such crowds. They are not tempted to invest in some craze, like pyramid schemes, because of a hot tip from a friend or relative. Such is the skeptical mindset that makes the difference between wealth and poverty.

The last indicator of financial success is honesty.

A reputation for honesty is among the most valuable assets one can possess. There are no limits to the doors that open and the opportunities afforded a man or woman whose words and actions can be trusted, especially in the financial world.

Whether you are of a truly high moral character, or possess the personal values of a street pickpocket, is not the issue. From a purely pragmatic frame of reference, conduct your financial affairs in a way that your reliability can never be questioned, even if it goes against the grain. This quality will put you on the path to financial success.

Meanwhile, are you tired of overspending? Confused about where all the money is going? A new iPadapp aims to help users manage their finances.

Mint, a web-based personal finance manager, released the iPad app last week. It provides a snapshot of a user’s financial profile by aggregating and categorising data from banking, credit and trading accounts, as well as information on loans, mortgages and assets.

The data is displayed in sleek graphs and charts, which provide insight into financial balances across accounts, remaining budget allocation and spending habits across categories such as food and dining, shopping, movies, and travel. "Eating out and shopping are two areas of discretionary expenses people will cut back on first," said Aaron Forth, vice president and general manager of Intuit Personal Finance Group.