Good Expenditure, Bad Expenditure

Money, also known as currency does not remain in one place for long. It is always on the move. Even when you save, your bank puts it into use. I remember one hilarious story I read on the Internet many years ago about a dollar note and a hundred dollar note striking a conversation as they waited in line to be shredded as they had come to the end of their useful lives. The dollar note was relieved to finally retire after being passed through countless hands as change, squeezed and rough handled, sat on, trampled underfoot, dropped in offering bowls, forgotten in pockets and passed through the washing machines etc. The hundred dollar note on the other hand recalled with nostalgia the glamorous life it had, being handled with care as it moved in wallets, brief cases, was stored in vault and visiting some of the most exotic places on earth.
Spending money is not the problem. The challenge is the type of expenditure. Not all expenditures are the same. There are good expenditure and bad expenditure. Good expenditure makes you richer while bad expenditure makes you poorer. It is not all about money, but the overall effect of moving you towards your goals – be it financial, health and fitness, relationship etc. It is the result that matters, not what you spend on. For instance, spending on your business can turn out to be bad expenditure if you are throwing good money after bad business. If your business is not doing well and you keep pumping in money, it can be bad expenditure if you are not making progress. It may be wiser to cut your losses and move on.
Assets and liabilities
Good expenditure is money spent on assets while bad expenditure is money spent on liabilities. Again in our context, it is the cash flow that determines if an item is an asset or liability, not the item itself. In the example above, the business had become a liability. One person’s liability can be another’s asset based on how it is managed. For most people, their mobile phone is a liability. They don’t make a dime from it. I know folks who make hundreds of thousands of naira from their mobile phones, running a BBM class for example, while most chat their lives away. Most of us are sitting on potential money spinners without a clue. I have a friend who makes money from his large screen TVs through events rental, whereas for most of us, the TV set is an instrument for putting our lives on hold while we watch others live theirs.
Ultimately, your mindset is the asset or liability. It produces that cash flow pattern you experience. It determines what you do with what you have. This is why it is critical to invest in renewing your mind, by overwriting old programs by installing new ones through learning, continuous growth and development. One woman may have a giant chest freezer and wander what to do with the excess space while another sees ice block and frozen foods sales. One feels ashamed to sell while the other sees a stepping stone to greater things. It still comes back to the mindset.
Making life better
Money is meant to be spent. It makes life enjoyable and more fun. I am yet to see someone who is given an option to fly first class that will choose economy class, or is given the option of a brand new car that will choose an ancient jalopy. But the challenge remains – how do you move from where you are to where you want to be, enjoying life to the full? You need to learn and practice delayed gratification. Focus on building assets so that your assets can pay for the lifestyle of your dreams. Allow your money to work for you so that you can afford what you really want without having to give up your soul to get it.
Take a moment and review your expenditure profile. Where is your money going? What percentage of your expenditure grows your income? Is your spending pattern moving you towards the life of your dreams or leaving your disempowered financially?
Many people in debt neglect to pay themselves first. Due to the pressure of paying others, they forget paying themselves, hence leaving them more exposed to financial uncertainties and prone to further debts. Your number one expenditure should be savings and investment, no matter how small. You should never neglect the principle of paying yourself first, even when the whole world is after you. Who are you working for anyway – yourself, your landlord or creditors? If you focus solely on paying back your bad debt to the total neglect to your saving and investment, you will go right back to borrowing if you get out eventually. You will see debt repayment in the context of being able to borrow again in future. With such a mindset, you will perpetually be on ‘borrow and struggle to repay mode’. You cannot get out of your problem using the same mindset that got you into trouble in the first instance. To escape that vicious cycle, you need to learn how to make better choices.
If you desire to move faster towards your financial goals, you need to reduce your bad expenditure and increase your good expenditure. That may call for making sacrifices for a season. It may mean letting go of a second car, domestic staff, home schooling your child attending crèche, moving your child to a cheaper school, find other creative ways to reduce cost and channel more funds into expenditure that will move the family forward financially. Often times, swallowing the bitter pill is required to move forward – stooping to conquer. If you worry about what others may think, you may continue hiding your festering wound under fine clothing.
Cutting back is not fun. There may be a lot of resistance – within you or from your spouse. Many women are afraid that if their husband cuts back, such perks may never be restored. If you keep an eye on the big picture, it makes the decision easier. Where you are is a temporary bus stop. This is not where you will end your life’s journey. You will bounce back and attain greater heights. If you get your acts together and return to the path of sustainable growth, the sky is not your limit. You will reach heights you hitherto thought impossible.
It comes back to your vision of the future. If it does not become so real to you such that you see yourself inside it, you may never get there. You may end up going round in circles, thinking the same thoughts, doing the same things, working harder, spinning faster and praying for a different result.

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