Many Kenyans are cautious with their money.
Nonetheless, some people have lost money instantly due to transactions and dodgy dealings they didn't understand.
While each situation is unique, common characteristics involve:
Whatever your situation, losing money quickly and suddenly is never fun. You could lose your entire earnings or savings and have to start anew.
Your confidence is shaken, and it may take longer to recover. Check out some of the most common ways Kenyans lose money fast and how to avoid them.
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Some people will merely invest in a business for fast returns, yet, they have no clue how it operates. You might hurriedly pour vast amounts of money into it because ‘everybody is doing it’ and not because you understand it.
It is easy to lose money if you do not know or understand every business detail. And while patience and proper timing are some of the greatest virtues of a successful investment, most people have the urgency to make money. They don't have time to investigate and learn.
Remember, even the most outstanding businesses can tank with the wrong timing. So, if you rush to invest in supplies and equipment and quickly plunge into a business, it won't take long before you unravel, coming out worse than you started.
Most get-rich schemes target unsuspecting Kenyans, promising them overnight riches and prosperity. The so-called good deals will often come in all shapes and forms, promising extraordinary returns within a brief time.
These schemes also create an urgency that makes it irresistible and hard to say no! And of course, they will come fashioned as a chance of a lifetime. Meaning, that if this train leaves you, you will never get another.
You have to raise your antennae if the promoters paint it as the miracle cure to all your financial challenges.
A recent example of get-rich schemes where people lost vast amounts of money includes Ponzi schemes.
Have you ever heard of Amazon Kenya workers? These operations work on introducing a person who pays a nominal or subscription fee from which you earn a commission, hence the name pyramid schemes.
But here is where the plot gets interesting:
If you carefully follow the history of most of the get-rich schemes in Kenya, many have fallen for broken promises while losing their hard-earned cash.
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If you want to lose money and friends at the same time, lend them money. The same is true for your closest relatives. It's a dangerous bet that almost always backfires.
A request for financial assistance from a family member or close friend in need can rapidly overwhelm you and tug at your emotions.
How do you avoid falling into such a trap? Well, there is no way you can wholly avoid loaning your very close ones money. However, you can make it an official transaction.
Personal financial experts advise you to write down all of the terms of the loan transaction. This eliminates any possibility that a borrower will assume the money is a gift.
However, there is one catch. The majority of these people do not bear many of the repercussions of not repaying. Some believe you will eventually forgive them, no matter how long it takes.
Again, they understand that such a loan will not hurt their credit history in places like the CRB. Also, you're unlikely to sue them; that's how you lose your hard-earned money.
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If there is a new money-making hoax to which many Kenyans are falling victim and losing money - It's an online scam. The familiar, well-coordinated, and dangerous of them all is phishing. For some reason, it blinds even the very financially savvy people.
There is no limit to online scams. You can lose your money if you do not thoroughly investigate online transactions, from shopping scams to fine print scams, romantic scams, fake debt help, and harmful downloads/fake antivirus software.
Think of scams behind digital currencies too. While Bitcoin and other cryptocurrencies are genuine trades, many con artists use them to swindle people out of money. That is, especially if you do not take your time to learn and understand how legitimate cryptocurrency and Forex trading works.
Meanwhile, the only way to distinguish between genuine and scam online businesses is to study their terms. For instance, conditions that ask you to send a commitment fee before they can deliver an item, and then you pay the rest on delivery, is a scam. Many Kenyans have also been sent to poverty frontlines with online scams asking them to come to their stores, but only processing paid orders.
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Gambling is not a reliable source of revenue because it is entirely dependent on luck. However, it is both appealing and addictive. You may first win tiny sums of money, which is a ploy to lure you in. The losing game will also begin in earnest, causing you to lose indefinitely.
Assuming you are a leisure gambler, a single weekend at a casino can wipe out your whole savings if you do not handle your money with risk. Place the incorrect bets or bet too much money on each wager.
What about the betting machine boxes that are found on practically every estate corner? These are some money traps where people lose money quickly.
The problem with betting is that the House must win. The stakes are always so tempting and sweet. Ksh100, Ksh50, or Ksh20 may appear to be so insignificant. Yet it's always on the agenda in the House. The House must win at all costs. What about you? You'll keep returning in the hopes of winning and that's how you keep losing huge amounts of money.
Read Also: Money & Me: The Gambler’s Curse - Why I Quit Betting
Anyone can lose money. But when it happens because of your greed or carelessness, you might have yourself to blame. How do you prevent this from ever happening again? First, research your way into any investment. Secondly, never jump onto any bandwagon because it promises instant riches. And lastly, learn the ropes before you can dabble in anything.