Financial consultant explains: You can earn well and still be poor — here’s why

Author, speaker, and finance and business development consultant Evans Duah has attributed the financial struggles of many working people to poor financial literacy rather than a lack of hard work, urging Ghanaians to rethink how they understand and manage money.

Speaking on the Asaase Breakfast Show on Tuesday (6 January)as part of the station’s Start-the-Year-Right series, Duah said a fundamental misunderstanding of money is at the heart of why many people remain financially insecure despite earning steady incomes.

According to him, many people fail to distinguish between money and currency, a confusion that leads to poor financial decisions.

“Currency is not a store of value because it is subject to inflation and other economic factors,” he explained. “Money, on the other hand, is supposed to preserve intrinsic value over time.”

Duah illustrated this with an example, noting that keeping large sums of cash idle over several years significantly erodes purchasing power due to inflation. By contrast, he said investing in assets such as land, fixed deposits, or treasury bills helps preserve and even grow value over time.

He stressed that financial literacy should not be treated as the preserve of experts, but as essential knowledge for everyone.

“Financial literacy is not something we should ignore. We should all understand what money is, basic investment options, and how earning and spending work together,” he said.

Duah also identified poor cash flow management as a major obstacle to wealth creation, arguing that high income alone does not guarantee financial stability.

“There are people who earn less but are richer than those who earn more. Cash flow structure determines the outcome, not income alone,” he noted.

Using a health analogy, he explained that uncontrolled spending is like unchecked bleeding in the body.

“If blood keeps flowing out and is not stopped, the person will eventually die. When people don’t monitor their spending habits, they will never achieve their financial goals,” he said.

On practical steps toward financial improvement, Duah urged individuals to clearly define what wealth means to them, noting that financial success is subjective.

“Wealth means different things to different people. Some want luxury; others want peace of mind, time freedom, or geographical freedom,” he said.

He cautioned against vague financial goals, urging people to set specific targets with timelines and purposes.

“You cannot say, ‘I want to be rich.’ You must decide how rich you want to be, by when, and in what form,” he added.

Duah also advocated disciplined spending, recommending that individuals avoid spending more than 60 per cent of their income, while prioritising savings, investments, and asset accumulation.

He further encouraged automation of financial decisions, such as savings, education plans, and contingency funds, warning that relying on willpower alone is ineffective.

“Willpower is overrated when it comes to wealth creation. If you leave things to motivation, you will fail along the line,” he said.

Highlighting the importance of asset creation, Duah said the long-term goal should be to build systems that generate income independently of active labour.

“The ultimate goal is that even when you are sleeping, money should be working for you,” he said, referencing investments in businesses, stocks, land, and skills.

He also stressed the need for emergency and contingency funds, drawing from his own experience of suffering heavy financial losses during Ghana’s currency crisis in 2022.

“No matter how smart you are, you can lose money. What matters is whether you have systems in place to absorb shocks and bounce back,” he said.