10/29/2013 01:58 pm ET Updated Jan 23, 2014

Will Grenada Always Be a Poor and Middle Class Society?

Plagued with economic problems such as high rate of youth unemployment, limited manufacturing industries, high national debt; an agricultural sector that has been ravaged by Hurricane Ivan and Emily in 2004 and 2005, respectively; and a heavy dependence on a tourism sector that was recently negatively affected by a lawsuit brought on by the EXIM bank of Taiwan; as well as adversely affected by the world economic crisis, Grenada's biggest weakness is also its greatest strength: its people, and their perception of money and debt.

While it is understood that money plays a very important role in our lives, it is our lack of understanding about money and how it operates that will ultimately keep us in the poor and middle class bracket as a people. Our education system is one that has failed us miserably where this subject is concerned. Our school's curriculum has many subjects including accounting and finance but none that teaches us as a people how we need to manage our money.

In our society many people get stuck in what Robert Kiyosaki in his book, Rich Dad Poor Dad, refers to as the rat race. In a typical family, a young man or woman may have an opportunity to achieve higher education; a privilege that his parents may not have had. This young man/woman upon graduation is blessed with a job paying him/her an average monthly salary of $4,000. The first thing that this person does is approach a financial institution such as a Credit Union or Bank, seeking funding to purchase items such as motor vehicles. Later they again approach their financial institution seeking funding for travel and vacation. Even later on, they again return further seeking funding for a birthday party. This vicious cycle is continued and what results is that they get themselves deeper and deeper into debt, and using this debt to purchase things that cost them more money on a monthly basis, or to purchase items that do not last as long as their loan period.

In Grenada today, financial institutions keep making it easy for persons to have access to loans. A prime example of this is the Grenada Public Service Co-operative, Credit Union, which, through the provision of personal financial management training for its members, seeks to enable responsible decision-making in relation to finance. However, the number of persons who takes advantage of this does not constitute an adequate representation of the institution's population. What we have as a result is a trend where persons find reasons to take loans and get themselves deeper and deeper into debt. When persons are buried deeply into debt it becomes increasingly difficult for them to achieve financial freedom. As a finance professional, I am always appalled at the minimal degree at which people understand the intricacies of money and how it works. On many occasions I have had clients come to me and say, "I have been given a four percent increase in my salary and I wish to take an additional loan and use the increase to contribute towards the payment"; a definitely bad move!

In Grenada we need to take a different approach to handling our money if we are to realize our fullest potential, We need to get rid of this mindset that will keep us in the poor and middle class brackets. We need to stop investing in liabilities and start investing in assets, and I wish to use Robert Kiyosaki's definitions of assets and liabilities here -- assets are things that put money into your pocket whereas liabilities are things that take money out of your pocket; and this is the secret that the rich knows that is keeping them out of the poor and middle class bracket. In Grenada we also need to stop taking loans for things that do not last as long as the loan period. Why would someone take a loan to be repaid over 24 months to go on a vacation that is lasting one week?

Something else that people need to understand is the concept of interest. When someone take loans they are told that the interest is 10 percent annually, however for long term loans in particular this 10 percent can amount to sometimes 200 percent and more at the end of the loan period. For example, an individual may apply for a loan of $50,000 and at the end of the loan period they may pay back $150,000. Hence the reason that we need to be very careful with the investments we make. If we are to leave the poor and middle class brackets then we need to stop thinking like poor and middle class people and start elevating our thoughts. We need to start taking actions in our lives. Sometimes we are a little too comfortable with the way we live. We need to understand that our lives really start at the end of our comfort zone. Grenadians and other nationalities need to wake up and take charge of their finances. It is then and only then can we begin to rise above the poor and middle class stigma.