The Art Of Budgeting, Saving and Investing For Creatives’
Bright Future
By. Fred Mutuku
e dierence between the riches and
poverty is determined by the management
of part of one’s nances. e best
management practice will yield best results,
all other factors remaining constant.
Recently a friend shared with me that “the
dierence between a salaried person and
the beggar on the street is a months’ salary-
a debatable point but very pregnant with
We have heard and witnessed cases of
people who retired aer decades of work
life and immediately transformed into
beggars. It sounds untrue but this is a reality
we face too oen. roughout their work
life, they had only one source of income i.e.
employment. What they did not realize is
the fact that employment income has an
KECOBO’s Trainings
is is not only limited to employment
income but even to business income,
whatever the nature of business. In
several tours made across the country,
Kenya Copyright Board has been training
musicians on how to manage their music as
a business. erefore, whatever holds true
to businesses or employment as explained
in this article aects them.
is can be well understood when we look
at a business life cycle, outlined, here below.
e introduction stage of a business is
usually a very dicult one. A business
may take time to grow its sales. is will
denitely impact its cash ow. It may
require huge marketing budget. It will
also need huge initial out ow in terms of
acquisition of essential assets. It is usually a
stage that requires proper management and
great discipline.
e growth stage comes immediately aer
successfully navigating the challenges of
introduction stage. e business at this stage
has many return customers and its cash
ows are impressive. It is making prots.
Expansion is usually common at this stage,
opening new branches or even introducing
new lines of business. e negative at this
stage is competition increase by the day.
If the management is able to innovate and
ensure superior customer experience then
competition will not be a major threat.
Immediately aer the growth stages, the
business enters the maturity level. Here
the business has almost constant level of
income. e cash ows are stable. e
management at this level will determine
whether the business will transit to the
decline stage or not. A wise business
person will create other income streams to
ensure if the original ones dries up, he or
she has a backup. On the other hand if the
management is not keen, the business will
descend into the decline stage.
e last stage is usually the decline phase.
If a business fails to diversify during the
growth and the maturity stages, it will
decline. Yet still if management does not
act with speed during the decline stage, the
eventual death of the business is inevitable.
e long background provided brings us
to the essentials of nancial discipline.
e management part, hence we talk
of Financial Management (Personal or
Corporate). e objective of nancial
management is value addition or wealth
creation. e value or wealth created is for
the benet of the owner. Value creation
calls for establishment of clear guidelines
on how we source for income and how we
spend it.
On Budgeting, it is said that he who fails to
plan, plans to fail. is is true in nancial
management. Windfall gain, employment
income and business income all need
discipline in spending. A budget is a tool
that ensures discipline in spending. It is
based on the notion that resources are
scarce and, therefore, need to be prioritized.
If we budget well and the budget is strictly
followed, we are able to release some funds
towards savings. Savings is a very good
concept both in personal and corporate
nancial management.
From the above discussed business life
cycle, we realize that at some point the need
for spare cash is inevitable. e money
put aside during good times will come in
handy during dicult times. It will help the
business in its expansion endeavors. e
same money can be invested to generate
more income for the individual or the rm.
When we talk of investment, one does
not need millions of shillings to invest.
Investment is a very broad term. It entails
anything that one does now for a promised
return. When a business man buys millions
of shares in a listed company, he is investing.
A return is expected at the end of the day.
When one is investing two things must
guide them. ese two things are risk and
return. Expected return is inuenced by
The Creative Industry
To invest smart is to take calculated risk.
However, if one remains too conservative as
pertains to risk, he or she will have minimal
returns. In other words the greater the risk,
the higher the expected returns. erefore,
any investment opportunity must be
understood in terms of its expected return
and the inherent risk.
Are you an artist, in the creative industry,
maybe your career is at its peak? Are you
suering from the consumption disease
that is inherent in the industry? Or are you
among the smart few who have innovated
beyond their core business? Wherever you
nd yourself, it is never too late. ere is
always room for improvement. Whatever
your level of current income, ensure you
spend wisely (budget), Save regularly and
invest smart. e dierence between you,
who today is ying and the underdog in
the industry is, your spending (budgeting),
your savings and your investments.
If you are earning your income from
singing, performing, acting etc., nothing
prevents you from investing in other areas
to grow your income. Diversication is the
term we use to refer to spreading your risk.
It is looking beyond your initial income
stream. Creating several income streams is
Personal development is another key
aspect. You need to be the best in the
industry. Invest in yourself. Acquire more
skills relevant in the industry. is will
set you apart from the rest. Complacency
breeds dormancy and eventual death.
Innovate, innovate and again I say innovate.