Personal Financial independence


Have you ever wondered why the rich keep getting richer while the poor stay broke while the middle class seem to be shrinking? This is evident when you examine the specific differences in how the poor, middle class and the rich spend their money.

We can associate all financial problems in life to lack of self-discipline, self-mastery and self-control in the way we spend money. People tend to spend everything they earn plus a little more, which is usually supplemented by loans and credit card debts.

One goal that most if not all of us have in common is we all want to make more money, we all want to have enough so we never have to worry about money again.

In my article this week, I bring out the perspective of a very simple concept yet so profound, it totally mesmerized me when I understood it.

Let us examine why the rich keep getting richer and the poor keep getting poorer while the middle class remains consonantly stressed out.

Before we get started, let us review some financial terms we shall keep dwelling on in this article that we are quite well aware of.

  1. Cash flow— to mean income or money you bring in or that which you have as income.
  2. Expenses – This is to mean money we spend in exchange of goods and services.
  3. Assets – The traditional definition of an asset is “something you own or have equity on”, however back  in the 90’s, Robert Kiyosaki the author of rich dad poor dad” introduced to us a new definition of “An asset is something that pays you” this shall be our preferred definition through out this article.
  4. Liabilities – This are things that costs you money, for example a house is typically classified

as an asset, but it can be classified as a liability. When we use our revised definition of “Assets are anything that cost you money” then it becomes a liability and not at all an asset. If you have a mortgage, your house is an asset to your banker, because it generates him or her income. But could a house also be considered an asset to you, Yes! In the right circumstances when it pays you money, say you buy a house and rent it out, and it brings you a positive cash flow every month after all expenses. That would then be considered an asset.

Now let’s look at how “broke “people spend their money.

When I say broke, I don’t mean the destitute, I mean those that form the large portion of our society that lives from pay cheque to pay cheque, and who never seem to have any money, in fact most times they have more of the month left than their money.

Am sure many can relate to this group. On pay day, broke people spend on what I will call, “Stuff” what is stuff? These are inexpensive things that people buy but do not really need to survive.

In our book keeping, the Cash flow comes in and then goes out to the expense column to buy stuff, entries made as below.

Cash flow / Income




Broke people never really take time to educate themselves on the major differences of assets and liabilities, they justify buying all of the stuff by claiming that they cost only a few shillings, however over the years, it’s all the tangibles they have. The problem is, their income never produced or create more cash flow. This is not a projectile thrown or targeted at any group, however it’s a response to an observation that a lot of difficulty is experienced out there which really doesn’t need to stay that way.

Creating wealth isn’t a mystery but a formula, the only reason someone doesn’t create wealth is because they either do not know the formula or don’t apply the formula even after becoming aware of it.

Let us look at the spending habits of the middle class.

The middle class is the group that the society mistakenly perceives as rich,in as much as they aren’t. Yes, they earn a six a figure income with most appearing as rich, but it’s what they buy with their money that keep them prisoners in this class.

What they typically spend their money on are liabilities. (Things that cost).

By buying liabilities the money gets into the expense and the liabilities accounts, an entry we make into our books as below.

Cash flow / Income







These liabilities are things like cars, houses, boats, credit cards debt and the like, those that attract other spending isles into our otherwise constant income.

Let’s see how this happens.

A middle class citizen gets a pay cheque of say 200,000Kshs. They then split that down in the middle and spend half on their monthly expenses and the other half they make, say for example part payment on a car they’ve been yearning to acquire. Once acquired, they find themselves spending through insurance, fuel and maintenance. That liability goes to add a more shillings up their expenses for the next few months, a few months go by after this and they want a house, then a boat, a vacation home and a Rolex watch or a vacation on their credit card. And before they know it, their liabilities have raised their total expense level to near or above their income level.

Cash flow / Income




Meaning they spend equal or more the amount they make. Meaning they have to make this amount of money every single month and extra, just to cover their liabilities.

Another important common issue with both the poor and the middle class is that normally all of their income is dependent on their own effort, meaning that they have educated themselves to exchange their knowledge, skills and expertise for someone’s money.

Take note, the money they earn is as well usually the highest taxed form of income.

Let’s take an example of a lawyer knowledgeable about law, they get paid in exchange for that knowledge on an agreed upon basis, the problem here is that if they are not sharing that knowledge through the services he/she is offering the client then he isn’t making any money.

This can cause a lot of stress and anxiety in their lives, and if you ever ask them to take them out on an afternoon, they very rarely can because of how much money it will cost them to take that time off. On the surface, life is pretty good.

Last we look at how the rich spend their money.

Rich people acquire assets, again an asset is something that pays you. If one wishes to be wealthy, buy assets that earn you money. Then get to understand and implement the money cycle principle.

The money cycle works like this. Acquire assets that produce income or generate a cash flow, invest the profits back to acquire more assets that will produce more cash flow. Investing profits back into acquiring more assets that produce more cash flow creates a growth loop that ensures expansion when properly managed.

The rich spend their money in acquiring things that produce more money. Some few examples of assets that produce more money include, stocks, bonds and real estate.

Education is another asset that generates money in that, if you learn something that helps you generate money and actually put it into use, qualifies it into the classification of an asset.

There is a saying that goes,

If you think education is expensive, you should see how much stupidity costs”.

Another example of assets you can acquire that pay you are cash generating opportunities, especially those opportunities that can create a passive cash flow, passive meaning that once you build it up, the money continues to flow whether you still building it or not.

Let’s say you buy a pinball machine and place it in a barber shop and don’t spend any of the profits elsewhere, you save them until you can buy another pinball machine and put it in another barber shop, which was by the way Warren buffets business and model of execution.

The rich are extremely eager to find those passive cash generating opportunities because these opportunities continue to pay them month after month, year after year, long after they stop working on the opportunity.

This happens again and again with successful entrepreneurs, they find a passive cash flow stream that continue to pay them month after month, year after year.

They then take the profits and multiply them into another passive cash generating opportunity, then another and another until the point they feel most comfortable.

In today’s life, there are more people achieving financial freedom faster than ever before.

When I speak of financial freedom, I don’t necessarily mean being filthy rich, but means you have enough wealth to live on without having to work for it, as opposed to it working for you.

With the below steps, you should be able to turn your financial standings.

1. Think positive of money, thinking negatively about money is an emotional obstacle you must eliminate in order to achieve financial freedom. It opens up more doors than you get to see with a negative judgment for money. For example, money does not grow on trees, Money is evil and many more.

2. Write a review of your financial goals and plan how to achieve it. Achieving financial freedom does not happen in random or in an up-hazard way, it is something you plan for, think about and work towards every single day with every available resources.

3. Plan every single day in advance, precisely the previous night if you can, or the morning before if unable to do it the previous night. Planning each day, week and month gives you better control of your finances, making you sharper and precise. You are better focused when you work from a plan. A plan makes it possible to achieve a better spending habit by planning how much you have to use or spend for the week, month, year or any period of your choice and tell on areas you can save.

4. Develop a habit of concentration, your ability to develop the habit of concentration ensures your personal financial success. The things you focus on and spend time on should be in direct alignment with your financial goals, this enables one to be completely aware of their expenditures as well which most times seem to ride on availability of floating cash.

5. Read books on financial freedom. Invest in self-improvement, read articles, listen to audio recordings, ensure you are always learning a thing or two about money. Improving yourself will directly improve on the skills you have on handling finances. Educate yourself, fill your mind with what it takes to become wealthy and find the resources that can help you get there. These range from blogs, web pages, books, seminars, go to the places that will get you more educated, identify those that fall within your industry and gain the necessary skills to dominate in your industry of choice, all sorts of avenues you can lay your hands on are at your disposal to achieve this.

6. Determine a course or a path that will deliver tangible returns, something you are passionate about and can follow, once you determine a way that will make an impact in your financial world, go ahead and execute.

Based on the theory “impact is equal to income”, the more people you impact, the more money you make in return. Check out those gifts and talents you have that can get you where you want to be if given an opportunity and developed.

7. Make a list of all the resources you need and start to go after it one by one, get those that are within reach.

8. Have a financial goal you wish to attain and allocate a time line to it. Specify a set period between which you target to achieve a set amount of income.

9. The secret of receiving is giving; give back, help others establish as well. The secret of receiving is giving, the only way you can get rich is by enriching others. If you do more than you are paid to do, you set yourself on a path of getting paid more than you do; Practice giving ideas, time, money, support and all you can afford, it is by giving that we receive.

10. Believe that you can and you will, be fair in the estimation of your self-value and your potential, then keep working at it slowly, steadily but surely.

In conclusion, you can’t find passive cash generating opportunities unless you are open to hearing about them without judging, approach them with an open mind and take time to understand how it works by yourself. Once you find them, you must be willing to see what fits best and then take action. These opportunities are out there, stay on it and you shall find them, you also must be opportunistic enough that when the right opportunity and situation presents itself, you don’t miss it. To help with this, learn the characteristics of opportunities and how they often present in your field of interest.

Remember, broke people buy stuff, the middle class buy liabilities and the rich buy cash generating assets that produces more cash flow.

The people who are fully committed and dedicated to making it happen are the ones that truly become wealthy.

If you have a vision, focus on it, if you have a dream chase it, whatever it is, consistently work at your craft, build the skill, become that go to person in that field. 

Dedicate yourself to the task whole heartedly and wealth will surely pave its way to you.



Frank Odhiambo

Mind Grid Perspectives

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