Personal Finance

How solid is your income?

financial surveys and challenges

You are very busy working your butt off from January to December, yet your income is not solid.

You are struggling to make ends meet. At the end of the year, you still don’t have enough money to enjoy Christmas or take your family out to a holiday. You are grinding like an old posho mill in Kakamega.  You see others making millions in weeks. You see chicken sellers become billionaires and wonder; what’s wrong with me?

Poor people are everywhere, and you don’t want to be everywhere.

Money is money, it does not matter where you get it from. However, there is a set of values that different sources of income possess that make certain sources more solid than others.

Solid money is ideal, it is like assured income. It is the income that can be handed down generations.

Fluid money is money that is strictly exchanged for your time or service. It is money that you have little control over and it is controlled by others who can decide to grow or extinguish it. It is less ideal and offers little security. This is a source of income that you should be running away from.

If you know what those values are, you may change your life by pursuing the sources that are solid instead of pumping your life, blood, and sweat into income sources that are less ideal.

Solid income posses the following qualities; speed, legality, residual, multiple, enjoyable, scalable, generational, controllable, freedom and adequacy.

  1. Speed

How long does it take for you to receive the money? The fastest income sources are the ones received continuously into your account, you do not have to wait. Such incomes include commission incomes paid automatically once you complete a contract, like selling an affiliate product on the internet, or mining income from cryptocurrency.

Think about government contractors whose business go down because they are illiquid waiting for government payments three years down the road. No business can run on promises, the Government should remember one business that goes down is buried with the jobs that could raise taxes for the same government.

  1. Legal

This is a basic requirement of a source of income. Illegal sources such as smuggling, theft, and corruption will only end you in jail and it’s not worth it.

  1. Residual income

This refers to how much money you will earning even when you don’t go to work. Insurance commissions have residual element because once you have made a sale, as long as that customer continues to pay for the policy, you continue earning your commissions, whether you left the company or not.

Most fixed income investments such as bonds, bills, and preference shares where you are guaranteed an income are good examples of residual income. This is like money working for money.

  1. Multiple Streams of money

How many sources of income do you have? A better source of income is one where you do one job or invest once and earns you several incomes. Example, if you own a mall, you can rent a big portion of it, while allocating another portion for your brick and motor business like a supermarket. Think about you doing one job of managing this mall, but your income is coming from different ways of using it so that if one way fails, you have the other going.  Internet businesses are big on this quality.

  1. Enjoyable money

Are you enjoying your work? Are you doing work which is your calling? Is the job you are currently working on a job you trained for or have you recently dumped a bad job for the one you love? Do you feel energized to wake up every morning to go to your work? Do you like your fellow workers? Do you like your boss?

Basically, if you feel motivated to do what you are doing, then it is enjoyable.

The question should be, if there was no one to pay me, would I still come to do this work?

People who do not like their jobs offer grumpy and gloomy service that drives customers away.

  1. Scalable income

How easy is it for you to increase this income? Can you increase it by 10% or 10X?

If you can increase your income, it means you have control over what you do and how you do it.

I think one of the worst jobs to hold in Kenya is a government job, where some independent person called SRC (Salaries and Remuneration Commission) decides the ceiling and floor of your income in the name of equitable pay. This is downright demotivating for productive people. It has been proved that employees are more productive if their pay is commensurate with their productivity.

A scalable source of income should allow you to increase your income if you want, by increasing your productivity.

  1. Long-term money.

This is income that you can earn for ten and above years. It is income and or skills that your children can inherit. It is income that makes your children want to keep your name. Such income includes royalty income, patent income, business income and professional income where a lawyer can train his son to be a lawyer and came and take over his law firm.

A patent is an exclusive right of use granted for an invention of a product or a process that provides a new way of doing something, or offers a new technical solution to a problem while a royalty is a payment made by one party, the licensee or franchisee to another that owns a particular asset, the licensor or franchisor for the right to ongoing use of that asset.

How confident are you regarding the time horizon of this income? Will you still be earning your current income in ten years’ time?

  1. Controllable money

When did your income last increase? Did you engineer the increase or someone else did? Employment income fails this test miserably. You can only control your output but the decision to a pay rise is by someone else.

  1. Freedom

Does your job allow you to take breaks when you feel like it? How easy is it for you to attend to family emergencies or issues? Do you have to feign sickness for you to get a day off to attend to personal issues?

Do you feel that your job allows you to work-life balance?

Freedom does not end there, it is also meaning how free are you to make decisions at your workplace? Do you feel your job is to just take instructions?

  1. Adequacy

Does your income cover all of your expenses are at least the basics? One of the tragedies of modern economics is setting minimum wages.

Listen to this, my brother works for a security company. He is on the minimum wage of Ksh 13,000. He is expected to pay rent in a slum of 5,000 including water and electricity. His fare to and from work every day is 3,000. Food he has to do with basics of 3,000. He is a family man, where is money for clothing, medicines, and saving?

Now you are wondering whether if there was no minimum wage he would have been worse because he would have been paid less, I don’t think so. In a no minimum wage situation, companies would pay depending on productivity and therefore most people would have a fair shot at being fairly compensated, without the company ticking the box of compliance.

I am neither an economist or labor activist, but this is one area the government and labor unions (Atwoli) should look at. Why set a minimum wage below a fair living standard?

Back to our headline, your income is solid if it allows you to meet all of your basics.

Are you wondering whether your income source is solid or fluid, head on to the survey below and find out, you will receive a personalized report that will help you determine steps to take to make your income options better.


solid income

How solid is your income?

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