Recently I wrote about a young man who’d spoken with me about a financial issue he was faced with.
I wrote about how teachable he seemed. This led me to believe his willingness to learn would result in him making the right decisions with his money.
I don’t know much about money but I thought to share a few things I believe have done much to help me in my financial decisions.
I believe financial security is one of the key ingredients to a stress free life and dare I say a bit of happiness.
If one lives in a place like Tana, Papua New Guinea, where the people need no money and live ENTIRELY on what nature provides – then this discussion is unnecessary.
If however one lives in a society that requires money for (EVEN) the water you drink – then this may be something you may decide to take a look at.
One of the reasons people (particularly middle-income earners) were hit so hard by the recent recession was way too many people lived from pay check to pay check. So when things got really expensive that check (that was already not meeting all requirements) was under even more pressure to do what was impossible for it to do.
As a working person you need a place to stay, food, transport, a few decent clothes for work, enough for school fees (if you have kids)- the rest are luxuries.
Last week was my youngest brother’s birthday. He had a very specific budget for his birthday toy. Walking around the store with him looking for a toy that would fit in that budget was a huge reminder to me about how I’d let my own finances slip a little.
So many times during out shopping expedition I was so tempted to buy him the toys he wanted because they were just “slightly” over his budget. But I knew if I did that I would be teaching him that it’s ok to spend more than what you have and more than what you planned to spend – something I have (for years) avoided like the plague. Living not only within my budget but way under it has served me tremendously well. It has over the years saved me from living from paycheck to paycheck.
Some may think me arrogant in what I’m saying but I recently had a conversation with a lady who cleans houses. She is of the same mind. She (might I point out) is considered in this country as a low-income earner. However she shares the same principle I do. As such she has managed to educate four children, built her own home and doesn’t have a stitch of credit to her name. She is absolutely debt-free and joyfully tells me she teaches her children to be happy with what they have.
It’s human nature to feel, “I deserve a nice car,” or “I deserve nice clothes” or “I deserve a fancy phone” or “I deserve a fancy house.” It’s absolutely natural to feel this way. But before you decide you “deserve” any of the things I’ve mentioned (or haven’t mentioned) may I advise that you tell yourself “I deserve a debt free, financially, secure future?”
Research in South Africa shows that for the most part, people don’t save. Money is spent as fast as it comes so when a crisis hits: stress levels go through the roof, people lose their homes, cars are repossessed and emergency (forced) downscaling is revved into action. This doesn’t need to happen. The time to downscale is not when times are hard. The time to downscale is when times are really really good. (Like saving that December bonus for the many expenses in January).
If you can teach yourself to live on less when you have much – you won’t struggle so much when the drought comes.
My dad once told me: “If you don’t have the money to pay for it cash – you can’t afford it.” It’s a lesson I avoided implementing for a while. But once I did I saw a significant change in my finances that has carried me through financial hurricanes that could have otherwise obliterated me.
Saving and being patient to acquire things as you build your finances is not easy. The rewards though are long lasting and worthwhile.
I remember watching a program on TV where a woman was spending her family to the ground.
Her husband had no idea how much debt they were in because of her insane shopping habits.
At some point during the program the people who were trying to help her said something along the lines of “You are trading your children’s futures for stuff!”
May I suggest: Don’t trade your future for stuff!
I hope to write a bit more on this subject.
For now I hope you’re already thinking of putting off things you were planning to buy but are really not necessary right now (if you can’t afford them in the long term).
Oh about my brother: he bought himself a really cool toy- and got some change- which he decided to save.