Thursday 11 January 2024

Peril of Poor Money Management: I Was Careless and Foolish

Photo by John Moeses Bauan on Unsplash

"Wealthy people manage money well while poor people mismanage money well." ~ T. Harv Ever

Not managing money well can make life as hard as a rock. Joshua not real name always took a lazyfe approach towards the things he did in life including money management. He often received money, used it without planning or accounting for it. He never tracked his money to know what he spent on. He got a good paying job and he was their accountant. The job of an accountant comes with a lot of responsibility. To cut the long story short, his bad habits of poor money management at an individual level got the best of him. At some point he couldn't account for company funds, this made him lose his job. The job loss was one of the hardest things that happened to him. It was a wake up call and he had to go through rewiring and reprogramming his financial habits and mindset.

Isaac a friend to a friend always says, “I am never with money even when salary comes in, it goes quickly without any major developments.” All this points to his financial management. Is it an upbringing issue or stubbornness?

When T. Harv Eker says, "Wealthy people manage money well while poor people mismanage money well," he is speaking of a high level financial skill and money mindset that we all need to have. 

Our mindsets and habits have been wired by what we have heard, seen or specific incidents that have happened to us from childhood. We need awareness, understanding, reprogramming and reconditioning to make great changes. Money management cannot change unless we change.

Two Stories: Callie and William

From his book Poverty Mindset vs Abundance Mindset, Dr. Sunday Adelaja shares a story of Callie Rogers. She was Britain’s youngest-ever lottery winner who wasted away her money on drugs, booze and cosmetic surgery. It is said, she became so depressed, she even (allegedly) attempted suicide three times. Adelaja writes, "Rogers was introduced to cocaine by a boyfriend and spent over $400,000 on the drug in six years before getting clean. She also got breast implants, fancy cars and more. Rogers was so broke, she could not even afford to have favorite gift for just 99 cents! Now that Rogers is broke, she’s back home living with her parents and works as a maid." 

Adelaja shares another story about William “Bud” Post: He writes, "You would think winning the lottery for $16.2 million would be a dream come true. But like almost every other case, it soon turned into hell on earth. William “Bud” Post had just $2.46 in his bank account. He just finished serving 28 days prison term. To afford lottery ticket, Post sold a ring for $40 and purchased 40 lotto tickets. Two weeks after winning, Post went on a spending spree... spending more than $300,000 on buying a restaurant, a used-car lot and an airplane. William “Bud” Post died 18 years after his big win. He admitted he was both careless and foolish, trying to please his family. He eventually declared bankruptcy and died with over a million dollars indebtedness. He allegedly remarked that “I was much happier when I was broke.

With those two stories with sad endings, money management must be over emphasised and one must understand what money is, know their financial blueprint to avoid having such endings.

Have a System

For people who manage money well. One of the key things they have is a system. James Clear shares from his book Atomic Habits and says,  "We don't rise to the level of our goals but we fall to the level of our systems."

A system is very important in ensuring we have the blueprint or the foundation to enable us build the house or houses that will last for years to come.

In his book System Building: The key to resolving every problem and attaining every goal Dr. Sunday Adelaja says, "The lack of understanding of a systematic approach to resolving different problems makes a majority of us attempt to use our strengths to solve every problem that comes our way but always fail. As a result, we stupidly waste our energy, we get tired frequently, disillusioned, and depressed by our low results and general inefficiency in life."Often, this kind of life leads to nervous stress and negative effects on our health.

Relating this to money management. The ANTS have a system and in their system they know there is summer where they do the harvest and winter where there is no activity. It is written they have no ruler, governor but they work together to ensure they gather and store. What do you do in your earning years/time? When Joseph knew there would be 7 years of famine, he was made governor and asked for a fifth of the produce(20%). It is prudent for you to set your financial system in order in this year 2024. Could it be the 50/30/20 rule? Whatever it is, have a system.

It is important to know how you are going to earn, save, invest, budget, track expenditures and give to the people who will need it. 

Some people only have a system/blueprint of spending. Whatever money they earn, they are thinking about the next hangout, party, clothes, shoes, car, etc. Paul Busharizi says, "If your spending was biased towards consumption and away from investment, you are barely making ends meet, regardless of your salary. If on the other hand your spending was biased towards investment and away from spending, you probably are better off than the average person around you."

This reminds me of Proverbs 21:20 - "The wise have wealth and luxury but fools spend whatever they get." As part of your money management, your desire should be to have wealth and how do we get wealth, it comes through investing. 

In your system, investing must be part of it just like we are taught in the parable of the talents. If you want to be the fool who mismanages money well, it's written that as the money comes in it gets out fast, its spent in every way possible. 

Don't be a fool. William "Bud" Post said, "I was careless and foolish." Be wise. Your wisdom will reward you.

Paul Busharizi says, "Eating our money provides instant gratification and also has the added bonus of making us “look” rich. While investing our money, not only will the benefits come sometime down the road but also chances are people will not know about it and therefore will not know that we are rich."

In his book the Psychology of money, Morgan Housel says that, "Wealth is hidden, it is not seen." There are so many people who are flamboyantly buying this and that to try and show off and they following every one who posts things on social media, you are keeping up with the Joneses but your pocket is not keeping up with them, You are broke! and you will continue to be broke and it will show even in your latter years. Paul says, "While investing our money, not only will the benefits come sometime down the road but also chances are people will not know about it and therefore will not know that we are rich."

You have to ensure that instant gratification is dealt with, not trying to show off because who cares, just care about yourself and do the right things to cater for your future. 

In his book Things Fall Apart, Chinua Achebe says,  

"He always said that whenever he saw a dead man's mouth, he saw the folly of not eating what one had in one's life time. Unoka was, of course, a debtor and owed every neighbour some money, from a few cowries to quite substantial amounts."

Don't be like UNOKA, he was;

  • Lazy
  • Poor and couldn't provide for his family
  • Heavily indebted.

"In his day he was lazy and improvident and was quite incapable of thinking about tomorrow. If any money came his way, It seldom did, he immediately bought gourds of palm-wine."

Manage your money well. The end is predictable. The wise have wealth and luxury while fools have nothing(they spend whatever they get.) 

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