Financial Management vs Drum Major Instinct
By Joshua Asiimwe - XENO Investment Advisor
The drum major instinct is innate within all of us. It fuels our desire to be out in front, the desire to lead, and eventually the desire to be first. This instinct runs the whole gamut of life and if used correctly, can drive you to success.
As a financial advisor, I help my clientele balance between harnessing and taming this instinct. I often challenge them with this scenario; previously you made ends meet with a salary of let’s say UGX 700,000. Why is it, now that you earn twice as much, you live beyond your means and are constantly in debt?
This is the reason people buy cars they can't afford on their income. Some don't even earn enough to own a good motorcycle.
A good financial advisor would guide you when purchasing a vehicle, to own one that doesn’t cost more than half your annual income. That means if you earn an annual income of UGX 16,800,000 (1,400,000 UGX per month) your car shouldn't cost more than UGX 8,400,000. That's just good economics.
So often, however, you see people making UGX 17,000,000 per annum and buying a car four times their income. And they wonder why they can’t make ends meet.
So, instead of taking out that salary loan/advance to buy that luxury vehicle, start investing to grow your money. That way, you’ll secure the car, and live comfortably within your means.