When it comes to spending, we naturally tend to act on the spur of the moment, losing sight of the long-term consequences. We do not see it coming. The reality is that everything has a consequence, either good or bad. The pigeons will eventually come home to roost – guaranteed. The question is not if, but when. Every time money leaves your hand, you are making a choice – a choice to become poor, middle class or rich. Your financial future is being formed each day as you spend.
Ignorance or faith is not an exemption
Many people believe it does not matter how they handle the money. Everything will turn out right somehow. Many believe that God will solve their financial problems for them. Their focus is not on their responsibility as faithful stewards of the money that comes into their hands. Their focus is on the expectation of an increase or financial breakthrough. They are perpetually hoping and praying for a financial breakthrough, believing that God will bless them so much that all their financial troubles will be over.
What most do not realise is that the miracle they need is that of sound financial management skills – becoming good stewards of what has already been entrusted into their care, knowing that if they are not faithful in a little way, God will not trust them with much. If you cannot handle money, more money will not solve your financial problems. More money is not the antidote to financial illiteracy, financial education is. If you are a leaking bucket, more water will simply expand the hole, making it worse.
If you confuse your seed with harvest, you will end up consuming it, hoping and praying for a harvest. You are like a farmer that planted nothing, hoping for a harvest through fervent prayers backed with fasting.
The thirsty traveller
A traveller through the desert ran out of water and was almost dying of thirst when he stumbled upon an abandoned cabin with a manual pump at the backyard. Beside the well was a bottle of water with a note attached. It was an instruction on how to prime the pump.
He had a tough decision to make – drink the water in the bottle to quench his thirst or pour it down the hole and prime the pump for a continuous stream of cool fresh water. He evaluated his options. If he drank the water, that may be his last drink. There was no guarantee of finding another one. What if he pours it down and nothing happens? Same as drinking the water in the bottle – he will be back to square one. His realised his real chance of getting out alive was to get the pump running.
He decided to take the risk. He poured the water down the hole and started pumping. For some scary moments, nothing seemed to happen. After a while, he heard a sound. Water started gushing out; clean, cool and fresh water. He drank to his fill, filled up all his containers, took a cool bath, replaced the water in the bottle, camped at the cabin for a while as he plotted his way back to civilisation. With enough drinking water, he made it safely home.
For most of us, we would have drunk the bottle of warm water and hoped for the best. That would be living from hand to mouth, praying for the next source of water, no matter how dirty. Our focus would shift from finding our way home to searching for the next drink. We would end up going round in circles, looking for water rather than finding our way home.
How far do you think?
We are all creatures of habit, and this includes the way we think. What time horizon do you consider when thinking? Are you on a pay-as-you-go mode or do you think far ahead?
What you see and what you put into consideration depends on how far you think. There are people who already have year 2014 planned out. Their 2014 diary is almost full. There are also those who have no idea what they will be doing next Saturday, whether they have money set aside to renew their insurance policy or how much they need to set aside for their Children’s school fees in January etc.
There are even some whose wives are pregnant and they have no money set aside to cover the hospital bills despite the nine months’ notice. Still, there are some who do not know when their rent is due nor set money aside for it. These same people will wear the latest fashion, harass neighbours with noise from their parties and buy aso-ebi for every event they are invited, spraying cash to play to the gallery. They shop without a list and spend on things that don’t move them forward financially. When their bills fall due, they run from pillar to post and bombard the gates of heaven for a financial breakthrough and last minute miracle. Some take it to the next level and pray for a debt cancellation miracle while others borrow with no intention to pay back. They sow bad seeds and pray for crop failure.
Another Christmas approaches
As another season of celebration approaches, it is another opportunity to stop and really think. Look back and then look ahead. What money lessons have you learned in the past one year? What was your experience in January 2013? Why were you so broke even before the middle of the month, and your children had to stay at home till month end although schools resumed by second week of January? What do you think you did to put you in that situation? What will you do differently?
If you cannot think one year ahead, at least try to think three months ahead; look beyond Christmas to the bills waiting for you at the other side of Happy New Year. Make provision for your rent, children school fees, living expenses in January etc. Consider the full picture, not just Christmas decorations, gifts and parties. Plan your cash flow accordingly, including saving by paying yourself first.
Allocate your funds based on available inflow. Create a budget for Christmas within this context, not a standalone feel good celebration. Allocate funds based on priority, not urgency. By the time you arrive with a budget that fits your available resources, distribute accordingly and do not rob Peter to pay Paul. Have a budget for the upcoming Christmas and stick with it. If after all said and done, you can only set aside N15,000 for Christmas, so be it. It is not a do-or-die affair. Scale it down to fit your budget. Find creative ways to cut costs. Big corporations are cutting costs, so there is no shame about individuals following suit. Forget about public opinion. It changes with the weather. What people think about you has no bearing on whether you will get to your desired destination or not. Be true to your goals and dreams. Look far ahead, and check to see whether your current daily actions support those goals and dreams. Think through before you spend.
The author of ‘Practical Steps to Financial Freedom and Independence,’ Usiere Uko, writes on thinking ahead before making spending decisions.
Culled from the Punch Newspaper