Your Money Questions Answered – Part 3

Firstly, I would like say thank you very much for all the ‘money questions’ that you send in. I love to hear from you and I appreciate your contributions because it lets me know exactly what you would like to learn about and ensures that the content on my website is relevant for you! I am at your service after all.

Secondly please read my disclaimer here before you go any further as I would like it to be very clear that I am not a financial advisor or planner. I am an educator and as such anything contained on my website is for information purposes only. Kindly read the disclaimer here.

1. ZK from Lusaka Zambia asked: If one had to have let’s say K10miliion or K12milllion; what would make sense to spend it on? Buy a car or a plot and start building? And when is it okay to get a loan if you will only be able to pay off with you salary?

Lelemba: I would recommend a plot and start building. Whenever you think of spending money; think FIRST of the spending on the things that will bring you money either immediately or in good time before anything else. A car is ‘nice to have’ thing but unless you will be hiring it out for example, as a taxi, it won’t make you money.

A car is a liability because it takes money out of your pocket. On the other hand the plot has the potential to become an asset as it could eventually put money into your pocket. You could build a house or hostels that you could rent out and earn money from. You could benefit from reading more on the differences between assets and liabilities by downloading my e-book here and read pages 10 – 12 here.

It is only okay to get a loan if you are going to use it to buy an asset that will make you more money than what the loan is costing you. For example; say you are paying back K200,000 per month to the bank for the loan. Make sure that the asset you buy using the loan will make you more than that. Do not get a loan for things like going on holiday, buying food or having a party. That is what is called bad debt!

To get a better understanding of the difference between good debt and bad debt read the article ‘Three things that every entrepreneur should be financially aware of’ here .

2. GM from Perth Australia: In your interview on the New York based Diaspora Voice Talk show on Blogtalk radio, you talked about the importance of budgeting and tracking your expenses. However one cannot always be prepared for expenses that may occur, is budgeting the only key to successful financial management?

Lelemba:  I agree with you completely that one cannot always prepare for everything. However you can be prepared for what you know.

A budget is not the only key to successful financial management, it is however the starting point for it. You can liken your journey to successful financial management to a long road trip. When planning a road trip to a faraway place, there are certain tools that you need to carry with you in order to get to your destination. A map is one such tool. It will show you the route for how to get from point A to point B.

In the same way, a budget can be defined as a road map for how you plan to make and spend your money. Note that it is not all about spending money but also about making it. Without such a map; it would be difficult to determine how much of the money you earn will be spend on what. Knowing exactly where your money is and what it is doing is a key ingredient of successful management. You can read about my 5 top tips for successful financial management here to learn about the other key ingredients.

In addition, in order to be better prepared for the unexpected expenses; ensure that your budget includes an allocation for ‘miscellaneous or emergency’ expenditure

3. JM from Ndola Zambia asked: I have just received some unexpected money from someone. What do you think I should do with it; save it or pay debt?

Lelemba: I actually recommend doing both and more J

I suggest that you come up with a simple formula for how you will deal with any unexpected or extra income that comes your way. This applies to any money that you receive that is not from your usual source of income e.g. salary or business sales. The formula should include savings, debt repayment, personal use and charity/tithe (if you believe in giving) and should suit your particular circumstances.

Having such a formula helps to ‘dilute’ the excitement that comes with getting ‘money out of the blue’. This excitement usually leads to reckless spending which doesn’t improve your overall financial position.

For example our family formula for unexpected/extra income is as follows:

50% goes to savings and investment

10% goes to debt repayment

10% goes to charity

10% goes to our business fund

20% goes to personal use


It is best to break it down as set percentages so that you don’t even have to think about ‘how much goes to what’ each time you receive such income. You simply split it according to percentages and carry on with life.

How you decide on the percentages depends on your circumstances. For example maybe you don’t have a business and instead have a lot of debt. If that’s the case then maybe the percentage that you allocate towards debt can be higher. Or maybe you don’t believe in giving to charity or tithing. Then you leave that off your formula and so on.

However I recommend that 50% goes to savings and investments. This ensures that your self-worth and net-worth are increasing at a faster pace. I also recommend 20% for personal use. This is your reward for earning outside your normal means and keeps you motivated to do more to earn even more. My friend Nikki Botha calls this personal use percentage her fringe benefits and spends it on clothes!

4. RL from New York USA: I am a single mum with two children and having financial stability is really important to me. How do I get more info from you on financial matters since I am thousands of miles away?

Lelemba: Keep glued onto my blog Lelemba.com. I will keep sharing articles and products that will help towards your financial education. Financial education is a great place to start when it comes to gaining financial stability.

I also offer online coaching which takes place in 4 weekly sessions. These are followed by 4 quarterly accountability sessions. You can find out more about this here.

And remember whenever you are in South Africa to make the effort to attend one of my workshops or talks. They are listed on the events page here.

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