Why Moneywise matters
I work all night, I work all day, to pay the bills I have to pay
Ain’t it sad
And still there never seems to be a single penny left for me
That’s too bad
In my dreams I have a plan
If I got me a wealthy man
I wouldn’t have to work at all, I’d fool around and have a ball…
Money, money, money – Abba
One of the most successful pop groups of the 1970’s, Abba, sold millions of copies of the above song and no doubt, earned many more millions from royalties. However little is known about how many hundreds of hours these four musicians spent in rehearsals, how many failed attempts there might have been at song writing and how they had to leverage their contacts in the music industry – producers, managers and publicists in order for them to become the globally successful pop group they turned out to be. This outcome applies to most successful personalities in sports, business, or the arts. We only read about them when they’ve attained success, not when they’re struggling or ‘sweating their assets’ to become successful!
From the numerous examples of wealthy individuals globally, in most cases they’ve had no short cut to riches. Most of them had to endure failure, sometimes faced ridicule and most of all, had to be resilient. It is rumored that American inventor, Thomas Edison, who perfected the electric light bulb, endured many failures before finally succeeding. Remember: There is no short cut to riches, or financial independence! You have to be focused, driven to acquire the tools, ready to change the mindset, able to leverage your resources, work hard and have patience.
In his best-selling novel, Rich Dad, Poor Dad, Robert Kyosaki highlights the difference between an asset and a liability. An asset is something that appreciates in value over time; a liability is something that depreciates in value over time. An example of an asset is real estate such as land or buildings because it usually appreciates with time. On the other hand, a car due to its wear and tear costs that come with age depreciates in value and hence becomes a liability.
Once you understand the difference between assets and liabilities, and you focus your efforts on acquiring income-generating assets, you are well on your way to wealth creation. Keep doing that and your value adding asset column (wealth) will grow. So make a concerted effort to keeping your liabilities and expenses down.
Due to the lack of effort to acquire knowledge and skills, it is not surprising to see how few people are actively building their assets or even vaguely committed to wealth creation! So many of us follow blindly consumer trends and purchase goods with no consideration of the value it can add to our lives. Open any magazine, newspaper or website and we are inundated with tempting advertisements of what we should buy; be it the latest gadgets or products we should have to be part of the ‘in crowd’. Peer pressure is a very powerful influencing factor and one of the major reasons why so many young students blow their bursary monies on the latest mobile phones, the hippest fashion labels and the trendiest hairdos, at the expense of their studies! Being so easily seduced to spend recklessly is one of the main reasons why so many of us live and die poor!
In South Africa especially, stories abound about the miserable lives of the poor, the large numbers of unemployed, the increasing number of social grant dependents and the rising numbers of those in financial distress. Our economists bemoan the fact that over 90% of retirees retire financially destitute, and that South Africa has a poor savings culture which besides causing financial hardships, also restricts the circulation of cash in the monetary system. Open any newspaper on any given day and on some page there will be news about service delivery protests against the government, or some other social problems. No doubt, we can argue that much of this is as a result of deeper social and financial defects within the capitalist economic system, but we should also acknowledge that much of it is also a result of our own failings, poor habits, financial illiteracy and inadequate life management skills.
The key questions we need to ask are: What should WE do, individually or collectively, within the current social and economic contexts we find ourselves in to improve our financial situation? Do we own our problems and have the drive and commitment to change what is necessary in our lives? Reflect on these questions for a while because unless we take full responsibility for our success, we will always be at the mercy of others!
It will be great if the government or some higher entity can provide us with sustenance or guarantee our economic well-being, but unfortunately, the sad reality shows otherwise!
There are two ideal sites at which sound financial skills can be developed: home and school. At home, children need to observe, learn and finally earn the wisdom of financial skills. This can be done through day-to-day mundane activities such as assisting parents with grocery shopping and bargain hunting at the supermarket, as well as being involved in drawing up household budgets. This will not only develop powerful insights into how spending should be prioritized, but can also lay a foundation for financial responsibility. If possible, parents should consider for pocket money to be earned rather than given, to avert instilling a culture of entitlement.
At school, financial literacy should feature more prominently in the curriculum not only as a formal subject, but can also be the basis for exciting and interactive extra-curricular activities such investment clubs. In today’s uncertain economic times, it must be noted that financial literacy or money management is as essential as reading, writing or numeracy skills. There are many examples of people who were functionally illiterate in their reading, writing and numeracy skills as a result of limited formal education, but who’ve nevertheless made a success of their lives because they knew how to extract more value from their money.
One of the many benefits from being proactive individuals is the awareness that we are the determiners of our own fates, that we hold the power to change and that we hold our destinies in our own hands. Unfortunately, various belief systems, ideologies and powerful individuals have disempowered us by making us believe that that our well-being is predestined and hence outside of our control. This thinking has bred a culture of passivity and dependency among many in our society, resulting in increasing numbers now having become dependent on handouts and grants. How long should people have to be dependent on the government for their sustenance and economic well-being?
We are not as weak as perceived. We have the power to break the culture of dependency. Our history in South Africa and across the world provides many excellent role models and examples of individuals or entrepreneurs who through exercising independent thought and proactive initiatives have risen above the poverty trap and achieved significant successes. Constructive action is:
The most sustainable form of wealth is that which is created, not wealth received from an inheritance, won from the lottery, or sourced via a social grant. Sustainable wealth and financial well-being accrues only from the constructive human action referred to above!
At the level of the student, limited financial resources can mean the difference between success and failure which can have life changing repercussions. Establishing a sound financial footing is there an imperative. Fortunately in our technology saturated world where we have access to the best knowledge in the world at our fingertips, money skills are readily available. Finding information is easy. It depends on how you integrate this into your life and how you transform bad habits into constructive ones. That is the essence!
I highlighted earlier the need for reflection and then to critically interrogate our habits and transform the ones that we feel undermine our life objectives.
In pursuit of this the following activity might be useful:
Activity:
Write down 4 destructive habits or behavior patterns you need to change in Column 1. Write down the new constructive habits you need in Column 2.
