HOW EMPLOYED PEOPLE REMAIN POOR DESPITE WORKING FULL-TIME, SAVING & INVESTING
Back in 2017, a young man whose career was on an upward trajectory came across what seemed like a life-changing business idea—investing in shares.
Like many, he had grown up watching TV and reading newspapers about the profitability of the stock market. So, when Safaricom, Kenya’s largest telecommunications company, floated its IPO, he saw this as his golden opportunity.
With unwavering confidence, he secured a Ksh.1 million loan from a local bank at an annual interest rate of 15%. At the time, Safaricom shares were trading at Ksh.5 per share, enabling him to purchase 190,000 shares.
Looking ahead, he was convinced that in just five years, he would be a multimillionaire. Many investors predicted that the share price would soar to Ksh.25, promising massive returns.
However, fate had other plans. Within months, the 2008 global financial crisis struck, followed by Kenya’s Post-Election Violence (PEV). The stock market plummeted, and Safaricom shares tumbled to below Ksh.2.50. Panic set in.
With loan repayments looming, waiting for a market rebound seemed too risky. In desperation, he sold his shares at Ksh.2.10, taking a huge loss. The proceeds barely covered part of his outstanding loan, and he had to dig into his salary for the next five years to clear the debt.
To add insult to injury, as he struggled to recover, Safaricom’s share price rebounded, soaring to Ksh.21.00. Had he been patient, he would have reaped substantial profits.
Stories like his are all too common. Many salaried individuals suffer similar financial setbacks but remain silent about their losses.
It’s baffling—how do so many educated, hardworking, and financially disciplined people still end up struggling despite earning a stable income, saving, and even investing?
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Here’s why:
(1) Trying to Kill Two Birds with One Stone
With jobs to maintain, bosses to impress, and bills to pay, most employed individuals cannot fully commit to running a business. Instead, they delegate the responsibility to relatives or friends, assuming they will manage it well.
The first hire often lacks ambition and is let go. The second is a family member who, despite their best efforts, has no business acumen. They, too, are dismissed.
The third—often an old friend or village mate—turns out to be dishonest. Before long, they drain the business dry and disappear, sometimes using stolen funds to start their own venture.
With no other option, the business is shut down, losses are counted, and loans are repaid without any return on investment.
(2) Investing Without Proper Research
Ask a salaried worker about their passion, and some will jokingly say, “Drinking and partying on weekends.” Ask them to research business trends, and they’ll claim they are too busy.
As a result, they make uninformed investment decisions. Some start hardware stores because they heard about a “construction boom” only to realize competition is fierce. Others rush into poultry farming without learning best practices, losing entire flocks to disease.
(3) Avoiding ‘Dirty’ Jobs
A branch manager won’t be caught dead selling tomatoes door-to-door. The only time they get their hands dirty is when changing a tire on their second-hand Toyota.
This distaste for labor-intensive work leads them to seek easy-profit ventures, often resulting in poorly managed businesses that fail.
(4) Being Out of Touch with Reality
Most salaried individuals are trained in school to memorize formulas and theories but are unprepared for real-world business challenges.
They assume success can be mapped out like a mathematical equation, only to be shocked when real-life complexities render their theoretical knowledge useless.
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(5) Reckless Borrowing
Many live beyond their means, leaving little room for savings. So, when a business opportunity arises—like buying Safaricom shares—they take out loans.
Banks readily lend to them due to their steady paychecks. However, they fail to realize that stocks should be bought with long-term savings, and start-ups should be bootstrapped, not financed by debt.
Business loans should be for scaling up, not launching a venture from scratch.
(6) Investing Out of Fear, Not Passion
Employed individuals fear job loss. Uncertain about the future, they start businesses as a backup plan rather than out of genuine interest.
Unfortunately, fear-driven businesses rarely survive beyond two years.
(7) Starting Too Big
Salaried individuals are caught in a rat race—competing on who drives the best car, sends their kids to the best schools, and throws the grandest parties.
When they venture into business, they maintain this “big lifestyle.” Instead of starting lean, they rent huge offices, hire unnecessary staff, import luxurious furniture, and spend excessively on branding.
Unfortunately, during a business’s early days, cash flow is king. Resources should be optimized for survival, not spent on aesthetics.
(8) Falling for Dubious Land Deals
If they’re not tied to a 35-year mortgage for an overpriced apartment, they are losing money in fraudulent land schemes.
Some buy into “Greenhouse Farming” projects that promise Ksh.500,000 returns annually from a Ksh.350,000 investment—only to realize it was a scam.
Others purchase cheap plots without conducting due diligence, later discovering they bought non-existent or disputed land.
The result? Years of repaying loans with nothing to show for it, sometimes compounded by endless legal battles.
(9) Lack of Patience
Business requires patience. Unfortunately, many salaried individuals give up if they don’t see results within two years.
They expect a business to replace their paycheck quickly. If that doesn’t happen, they quit.
Take FUBU, for instance—the global fashion brand. Its founder endured nine years of struggle before seeing profits. Success demands a long-term vision, something many employed investors lack.
(10) Poor Financial Discipline
Some quit their jobs to pursue business but fail to adjust their spending habits.
They continue paying for expensive gym memberships, dining at high-end restaurants, and living in costly apartments—lifestyles their employers previously subsidized.
Instead of reinvesting profits, they drain their businesses dry, leading to inevitable failure.
Ann’s Costly Lesson
Ann had always believed in the power of hard work. With a stable job at a respected firm, she earned a decent salary, saved diligently, and even dabbled in investing. Yet, despite doing everything “right,” she found herself struggling financially year after year.
Her first investment was a boutique in the city, a dream she had nurtured since university. But with a demanding 9-to-5 job, she couldn’t run it herself. Instead, she hired her cousin, Jane, to manage it. A few months in, Jane started showing up late, then missing entire days. By the time Ann intervened, stock was missing, rent was overdue, and Jane had quit.
Determined to try again, she invested in a poultry farm after hearing a friend make great profits. Without researching the business, she took a loan, bought 500 chicks, and hired a farmhand. Two months later, a disease outbreak wiped out the entire flock.
Desperate to recover, she jumped into yet another venture—buying land. An advertisement promised prime plots at an unbeatable price. Without verifying ownership, she paid upfront. Months later, she discovered the land was government-owned. The sellers had vanished, leaving her drowning in debt.
Ann’s wake-up call came when she realized she had spent years chasing financial freedom but was instead trapped in a cycle of poor decisions. She finally took a step back, educated herself on business, and started small—this time with patience, research, and discipline.
It wasn’t easy, but years later, Ann looked back and smiled. She had learned her lesson: working hard wasn’t enough—working smart made all the difference.
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Final Thoughts
We work hard to create a better future, yet many sabotage their own financial well-being through poor investment decisions.
If you’re employed and planning to invest—whether now or in the future—take these lessons to heart. Avoid these ten financial pitfalls and make informed, strategic decisions for long-term success.
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