Money growing in a jar

What’s the smartest way to grow money?

I get asked this question quite a number of times. Today I am going to share some insights and tips on how exactly you can go about growing your money. Knowing how to grow your money is the ultimate key to your financial freedom.

If you’ve been on the financial journey long enough, you know that most financial concepts sometimes feel easier said than done. Today I want to make it very simple, very practical, and very digestible. You will be able to sit down and look at your personal finance goals as something you can be consistent in and achieve.

First things first, make money.

You cannot grow the money you do not have. I know that sounds almost obvious, but every time I interact with people on social media or talk to my clients, I have come to establish that most of us are very focused on our expenses. We are very focused on how we are spending our money that we overlook the income aspect of it.

It is worth noting that one source of income is too close to none because if the income dries up then you are left with nothing. And so, I tell people when you’re starting your journey to financial freedom, I know we all want to be excited about saving and investing and growing wealth, but you need to take seriously also, where your money is coming from. Even as you watch how you are spending your money; you need to be on the lookout for how you can increase your sources of income

It is very difficult to grow money as long as you are living paycheck to paycheck. So, the first step in being smart about growing your money is making money

Now, Keep the money

After you’ve started making money, you actually need to keep it. The most obvious reason why you need to keep some of the money that you make is that you need to actually pay your bills. But there’s more to life than actually paying bills. You need to save money for your emergency fund and for your investment goals. Without an emergency fund, anything could happen to you at any given time and you would have zero defenses.

You are probably wondering what to do if after taking care of all your monthly obligations, you have nothing left to save? That is a clear indication that you are living above your means and so you need to cut your expenses. You probably need to move to a much more affordable house, probably use public transport more, and just generally cut back on some f the luxuries from your budget.

Finally, it’s time to multiply the money

To achieve financial freedom, merely making money and saving that money is not enough. We need to multiply that money and the best way to multiply and grow money is to actually invest the money. Someone once told me that money is only valuable when you put it to use. If you have money in your pocket right now, that money won’t help you much insofar as your financial freedom is concerned. But, if you put that money in a financial asset or an investment that gives you a 9% interest rate, then you are putting that money to use and that money is eventually going to make you more money. And that’s how you grow your wealth.

If you are new to investing or just generally wondering where to start, this blog on 7 Investments you can make with KES 5,000 is an excellent place to start.

Some people don’t invest because they are afraid of losing money. News flash! You are losing the money you don’t invest due to inflation. Inflation is the rate at which the prices of goods and services go up every year. Now, assuming that the inflation rate in Kenya right now is above 5%. This tells you that the prices of commodities and services are going up by 5% every year. Meaning that KES 5,000 not invested this year will be 5% less its current value next year. But suppose I invest that KES 5,000 into a Money Market Fund with a 9% interest rate, the interest rate will cover the cost of inflation and that money will actually be more in value.

To conclude, in an age where we want quick money, I want to remind you that the best way to get rich is to actually get rich slowly because that is what is sustainable in the long term. So, in your journey to do these three things; making money, keeping money, and multiplying money, it will save you a lot to avoid questionable shortcuts. If the deal is too good to be true most, more often than not, it is actually too good to be true.

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