MONEY MATTERS

PAYCHECK-2-PAYCHECK!!!

Ben Franklin, a renowned writer and founding member of the United States said, “If you know how to spend less than you get, you have the philosopher’s stone.” When I read this, I did not fully understand what he meant by ‘philosopher’s stone’, so I conducted some research to better understand what he meant by ‘philosopher’s stone’. In the world, the philosopher’s stone is a legendary substance capable of turning inexpensive metals to gold and it was sometimes believed to be an elixir of life useful for rejuvenation and possibly for achieving immortality (Wikipedia). 

So, I may not be far from the truth in assuming the stone referred to a secret way of getting wealthy. Therefore I can conclude that when you spend less than you get, and actively save and invest a set amount monthly, fortnightly, weekly or daily (that is the philosopher’s stone) even if it means that your quality of living is a bit lower than others (then you become an inexpensive metal), you are going to in the long run become very wealthy. And the only difference between you and your colleague is that extra investment you are doing or you did some time ago. Unfortunately, I am not convinced that many of us have even heard of this ‘philosopher’s stone’ much more know its use and importance. But not to worry, I am going to make it simple for you to understand; so let’s go.

Have you noticed the insatiable desire of the youth of today to get rich NOW? If you have not noticed, I believe it is no longer ‘Get Rich Quick’, it has graduated to ‘Get Rich Now’ and I find that very disturbing.  After all the ‘Struggle to Success’ stories we hear on the radio, watch on television and read about on the internet or the papers, we still do not get the catch behind these success stories. The catches are the ‘struggles, investments, failures and hard work.’ Of course some success stories are made by inheritance but without sound continuous investments and hard work, these inherited success stories turn out to be epic failures. Success is a journey and not a destination; it is neither a phase of life nor a lifestyle but a part of life. Being successful comes with its responsibilities and that is what most of us refuse to acknowledge. 

Being a successful business man or woman does not mean you stop working, it means more work needs to be done to sustain the success. Why do you think magazines compile list of ‘richest millionaires and billionaires’? They do because, if you cannot prove your worth by staying wealthy, then you are not worth mentioning. Did you know that Investments rank first in the top ten ways to become a billionaire according to Forbes Magazine? Followed by Technology, Real Estates, Fashion & Retail and Media? Several stories of self-made billionaires worldwide begin at zero and these serve as the best reminders of the ingenuity and perseverance that are vital in getting anyone a success story. Did you know that these self-made billionaires and even inheritors of fortunes share the number one way of getting wealthy and it has always been ‘INVESTING’; unbelievable right?
 

However, you will agree that it makes perfect sense. How best to make more money than to let your money work for you and in so doing you definitely have to spend less than you earn and that is exactly what Ben Franklin meant with ‘philosopher’s stone’. No matter how much you earn, whether it’s in hundreds or billions, when you spend less than you earn through a program of investment, you will definitely enjoy the benefits. But mind you, the benefits do not materialize over a short term. This program of investments can really yield to its maximum over a long term. 

This is one of the reasons why the youth of today are being urged to cultivate the habit of savings and investments while they are still young as in my previous article Exclusive for Twenty Somethings; the need foSomethings.ana.com/lifestyle/7266/16vious article Exclusive For TWentyf savings and investments at a young r parents and guardians to educate their children about savings and investments right from the start at home in Teach them Young and why it is important for individuals to know their strengths, weaknesses and how to manage their funds and projects in To Grow or Borrow. Getting rich now is not the solution. Besides even if you do manage to get rich now, you will need to sustain the money tomorrow and long into the future and how will you do this if you are unaccustomed to the habit of savings and investments? You tell me.

Many of us who find it difficult to cultivate and maintain this habit of savings and investments mostly end up living paycheck-to-paycheck. That is my ‘modernised’ way of saying ‘hand-to-mouth’. The best financial tool we get used to using is the budget which is almost always in deficit! So why don’t you save and invest some percentage of your pay check (earnings) before you draft your budget? (Which is in deficit already anyway?) That is when you discover the philosopher’s stone. You end up securing your future today! Living a less quality but comfortable lifestyle today can give you the push you need tomorrow, those unexpected emergencies that need to be catered for and all the nights out with boyfriends and girlfriends could easily be taken care of. 

There is time of everything mates, so why don’t we learn to slow down on the chase for wealth and instead choose to go slow and steady? This is not to say give up on your dreams or become lackadaisical in the pursuit of your financial goals; you will end up living paycheck to paycheck if you do not save and invest some of your earnings, no matter how meagre the amount, presently. You may want to hit the jackpot in future but I suggest that you hijack the pot now by planning, saving and investing. Besides the earlier you begin, the more you earn in future and the quicker you become rich. Remember though that it is a gradual process and is dependent on how much you earn, save/invest, spend, and the length of time you invest. It is better to get the philosopher’s stone presently than to fall into the circles of a Paycheck-to-Paycheck lifestyle later in future. Here are the reasons why you need to avoid this lifestyle:

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  DISSATISFACTION:
This happens when all you have is the next paycheck to look forward to. All your plans are mostly put on hold and you end up not really doing things that you would have done ordinarily. Life becomes a mere formality of paying monthly bills, doing monthly shopping and actually not planning for any emergencies which is one disaster on its own. You become very reserved, judgmental, and mostly tend to disregard other colleagues and their comfortable lifestyles. You may not be really poor but the truth may be just that you have no assurance of your own future; always anxious, you tend to measure almost everything in terms of money. You unknowingly become a miser who has no money to ‘waste’ because your next paycheck is not yet in! Imagine what you will go through when the date for your next paycheck is missed by a week or two!

·         BORROWER & DEBTOR TAG:
This is what I call the ‘invisible name tag’; until you actually start planning for emergencies through savings and investments, you become the ‘beggar’ whenever the unknown hits you and unfortunately your paycheck does not arrive. You realise you may be earning more at work but will be borrowing from a junior who earns lesser. It is not because you do not plan or budget, it is because savings and investments are not in your budget. You may end up moving from one company to another securing for loans when the time comes for fee paying and other pressing responsibilities. Not that taking a loan is not good, not at all; however it may be just prudent to spend lesser than you earn through savings and investment so that your credit risk when going for a loan is not sky rocketing high and hence attract higher interest rates.

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Exchange STONE...

 For GOLD!

It takes a lot of concentration and energy for anyone to successfully complete the savings and investments journey, even billionaires. So do not worry when you feel very poor, pained and strained in the beginning of the journey of investments. But the bold step you take to spend less than you earn today, will give you the power to own the world if you so wish to. It is only a matter of TIME. Investments work better in the LONG TERM so be bold and take the step and hang onto the ‘Philosopher’s stone’ and you will be glad you did. So this new year, I encourage you to insert savings and investments into your budget if you do not have it there and to continue earnestly with investing if you have already started. Remember that procrastination is not only the thief of time but adds stress to your life. Again, fortune favours the bold (people who bravely go after what they want – savings and investments, are more successful than those who try to live safely - paycheck-to-paycheck)

I wish you all the very best in your endeavours this New Year and I hope the knowledge of the ‘Philosopher’s Stone’ gives you the power and encouragement to live life more simply yet more comfortably and satisfactorily. Let’s exchange a Stone for some Gold this New Year! BEST OF LUCK!