The Power of Thrift

“Thrift” comes from the verb “to thrive”. To thrive means to flourish, grow vigorously, to gain in wealth or possessions, to progress towards or to realise a goal in spite of or because of circumstances… ” (Mirriam-Webster dictionary). In other words, thrift isn’t so much as cutting down or not spending money. It’s about being careful in your behaviour so you can reach your goals, be happy, successful and prosperous and live your best life without unnecessary financial stress.

The three scarce resources

In life, there are three scarce resources which need thrifty management to achieve your goals, objectives and dreams. And no, money isn’t one of these scarce resources, at least not directly.

Time, Health and Energy

These are the three resources that are finite in this life. You can only use them once. They are non-renewable. So be careful how you spend them!

The thing about time, health and energy is that you don’t know how much of each of these scarce resources you have left to you. It’s impossible to know how long you’ll live, how healthy you’ll be in your later years and how much energy you’ll have. And all of these factors have a direct effect on how much money you’re going to be able to generate during your lifetime.

Money is time

People often say that time is money, but, in reality, the reverse is true. You trade your time, your health and your energy to generate money that many people then squander unnecessarily on things they don’t really need and often don’t even bring them much enjoyment. Every time you make a spending decision, you’re committing yourself to working more days, months and years in a job that perhaps you don’t even like to get your bank balance back to where it was before or to move forward financially.

Selective spending

Given this, when you spend money on non-essentials, make sure that the enjoyment those things bring you more than offsets that extra time that you’ll have to dedicate grinding away at that day job! When you spend money, you’re really spending your finite resources of time, health, and energy which are in diminishing supply. Just because that paycheck comes in at the end of every month doesn’t mean it’s going to last for ever. Jobs come and go, you get old, sick and tired. And there will be a time when you’ll have to live only on what you haven’t spent and have saved up instead of just spending next month’s paycheck. State pensions are unreliable at best and they’re kicking in at an ever more advanced age – 65, 67 years old or even more by the time you get there.

Work ethic

Thrift is closely linked with work ethic. Some historians tell us that Protestants in Northern Europe in the sixteenth century developed an ethic of hard work as benefitting both yourself and society as a whole. The concept of thrift went hand-in-hand with this. After all, if you’re working hard for your money, it makes no sense to squander it. There have been various counter-arguments as to where and when all this really started, but for our purposes it’s unimportant. The concept is still just as valid, wherever it came from.

Entitlement

The mentality of entitlement is almost the exact opposite of thrift. Entitlement is where we assume we deserve things but without having to work too hard to get them. In reality, just because we went to university or did well at school doesn’t mean we’re entitled to a comfortable way of life with all the luxuries and conveniences of the 21st century. You could even say there’s no such thing as rights if you don’t accept the responsibility to work hard to get them. Of course, I’m talking in the sense of material possessions, not clean affordable drinking water or free education to the age of 18 which I regard as basic human rights.

Bad habits

Every time you put a cigarette in your mouth, drink too much, even exercise too strenuously you’re squandering your health. Every time you spend a whole evening watching rubbish on the television or even sleeping too much, you’re wasting time that you could use in a better way. And every time you waste energy on things that don’t bring you real enjoyment, you’re throwing away the chance to use that energy on more important things.

Conclusion

Richard Quest in his financial programme on CNN always finishes with the words, “And whatever you do, make sure it’s profitable.”

Enjoy yourself but be thrifty with your finite resources. Be selective in how you spend them, get the biggest bang for your buck and make them last you as long as possible for the rainy day that’s bound to come along at some time or another.

How Stress Affects Your Wallet

Worry and anxiety are probably the most operative words usable as descriptive vocabularies of the term stress. Do you have fear or anxiety clouding in any sphere of your life? Do you have professional or job-related stress? Concerns about your retirement? Anxiety about whatever’s in store for the coming year? Or concerns about your personal relationships with your friends, fiancĂ©, or family members? All these worries and anxieties have a significant impact on your wallet. Stress can either bolster your financial wellbeing, or it can elicit an adverse outcome on your financial well-being depending on the context of the dilemma.

Positive impacts of stress on your financial wellbeing

An anxious mind tends to think about the possible solutions to the looming predicaments. Ergo, when you are stressed with bills in your house, the brain develops a scheme that will provide cheaper alternatives that are cost-cutting, hence more savings. The survival instincts that kick in when worry occupies can be very effective reality checks to your expenditure.
Stress gives you the motivation to work harder and earn more money. When you are concerned about your life after retirement, or about how you will provide for your children sufficiently, you become driven and strive to generate more income so as to be financially stable later on in life.

Negative impacts of stress on your financial wellbeing

Stress has a negative impact on your physical and mental well-being; the two key components of human productivity and hence ability to earn. The decreasing mental and physical health culminate to taking sick days off, lack of focus and hence reduced efficiency, quantity and quality of output, therefore, hurting your income.
Psychological conditions attributed to stress require either therapeutic intervention, or pharmacologic management, or both treatments. Treatment of these mental conditions is costly and can irreparably eat into your wallet.
Anxiety and other symptoms of depression also affect your level of productivity and ability to earn income. Depressive symptoms such as low self-esteem and poor grooming and hygiene reduce your confidence and interpersonal skills significantly leading to a reduction in your productivity and ability to achieve your full potential and earn income from the same.
Poor mental health impedes prudent decision making leading to impulsive expenditure and unsound financial management. These are detrimental to your overall financial being as they result in increased costs, missed opportunities for more income and wastage of dollars.
Stress can also lead to depressive tendencies, including self-deprecating behavior, especially overindulgence in addictive behaviours. Overindulgence entails high expenditure in unnecessary deeds, sometimes leading to addiction which attracts further costs.
Your concern over the prevailing conditions shows a lack of satisfaction hence the need for a better position or results. This stress emanates from the need to fit in, you may blow your hard earned money so as to appeal to a particular class and this can lead to accumulation of debts that are unhealthy. The desire to change the prevailing conditions can result in extravagant expenditures that are unsustainable at your level of income.

Chris Bouchard is a strategic consultant who works with non-profit leaders and social entrepreneurs to apply concepts and techniques to identify complex strategic issues, find practical solutions, and devise strategies to create and win a unique strategic position. He also offers project development, proposal writing, and project evaluation services.

Why People Rarely Get Rich Quick

The world seems like a huge ball full of endless opportunities to get rich but still millions, if not billions, of people are stuck in poverty. While some cases may be argued as sheer bad luck or misfortune, most people are simply not becoming rich because of various factors that will be highlighted.

Most people don’t become rich quick because of the failure to balance the paradoxical process that is full of contradictions, requiring a strategic balance of the various elements.

They never plan

Without a plan, and without sticking to the plan, becoming rich becomes a moving target or a wild goose chase. Most people do not become rich quick because they just lack the plan to take them there. Whereas plans can be subjected to turbulence, they provide goals and contingent approaches of achieving these goals or salvaging the entire venture if things become unbearable. Without a plan, and without goals, nothing can ever be accomplished, and you will keep on starting all over again every other time.

They procrastinate

The best time to start acting on your plans is now. Most people, however, postpone their plans until it all remains as a thought that can never be actualized. Without starting, you can never know the challenges and neither can you come across the opportunities and hence becoming rich for these people is also postponed.

They never invest

We have all heard of hardworking employees who retire without a penny in their retirement accounts and have to continue working for their daily sustenance in their retirement ages. It becomes impossible to get rich if you only depend on one stream of income known as linear income. Linear income requires that you get a job done for the payment to be effected and hence without working, there is no stream of money. On the other hand, passive income is the money earned from investments that give a return without you having to step in the office. Passive income is the equivalent of making your money to work for you as opposed to you working for the money. Most people will keep on laboring but will not experience their financial breakthrough because they do not make investments that will enable their money work for them.

They lack intent

Intent is masked in several facets including ambition, accountability, and responsibility among others. The process of becoming rich is an intentional journey that must be followed to fruition. It means that you will take responsibility and remain accountable to yourself, and even when faced with obstacles, your ambition will drive you through up to the realization of your goal. This requires a balance between courage and foolishness, and patients and grabbing opportunities. Most people who do not become rich quick simply lack the ability to persevere and exercise restraint while others exercise restraint and perseverance enough till they miss the chance or get ‘burnt.’

Chris Bouchard is a strategic consultant who works with non-profit leaders and social entrepreneurs to apply concepts and techniques to identify complex strategic issues, find practical solutions, and devise strategies to create and win a unique strategic position. He also offers project development, proposal writing, and project evaluation services.