Monday, 7 March 2016

RULE 82: Don’t Spend It Before You’ve Got It

By on 05:00
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Glo Ambassador and Actor Odunlade Adekola with Actress Laide Bakare

Gosh this is a hard one for me. I have to admit I find this one of the most difficult to take on board. How am I to learn this one? Any tips? I know I should:
• Budget for today and only for today. If I don’t have it, I don’t spend it.
• Ignore what I think or know is coming in, in the future.

• Put loads aside for tax - no, even more than that.
• No loans, overdrafts, no borrowings of any sort so I won’t be tempted to use future income to payoff debts run up today - or the reverse, run up debts today knowing that income from the future can be used to pay them off (very naughty). 

“The bubble has to burst somewhere and if you are always spending in advance you will get caught out one day”.

The downside of spending future income is:
• The income may not materialize or be less than you thought.
(Counting chickens that never hatch) 
• The bubble has to burst somewhere and if you are always spending in advance you will get caught out one day.
• It encourages sloppy financial planning.
• Whatever you bought will have long lost its appeal or wear out, get broken or even completely forgotten.
• You lose touch with reality - the future isn’t real until it becomes today - and as such you can overspend only too easily.
I guess I need a four-point plan:
1. Question whether I need a particular thing today or could wait until later to buy it - a useful ploy as once the ‘blood lust’ has worn off the appeal often wears off too.
2. Question whether it is worth it. Obviously, if buying today against tomorrow’s income, you will incur interest - so is it worth the extra?
3. Question the risk factor. If I commit myself today, what if my circumstances change and I need that future income for other purposes?
4. Question that if I spend today I might not have income for a really exciting spend that might come up - better to keep it just in case.
Follow this with me and it should reduce our credit card balances considerably.

From The Book; The Rules of Wealth by Richard Templar
(Read Rule 83 of Rule of Wealth tomorrow on Asabeafrika)

Read-to-Wealth Series

Gbenga Dan Asabe

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