The year is coming to a close providing us a useful opportunity for reflection, individually and as a country.
As
a country we continue to trudge along, the economy continues to grow but we
struggle with how to distribute these gains more equitably. The consequence is
that the rich get richer and the poor get poorer. This need not be.
To
begin with, if corruption could be handled more decisively we would have better
services.
A
better educated population should earn more individually as the economy shifts
towards more specialized and sophisticated services and products. A healthy
workforce should be more productive with less working days lost due to illness.
And better infrastructure should lower the cost of doing business encourage
expansion of existing companies while making the country attractive to new
investment.
All
the above are government functions or at least, government has a critical role
in making them happen.
However, we have individual responsibility for our own financial well being. It starts with the way we think about money. Our financial literacy....
As
simple as it sounds the way we think about money will determine our financial
station. The difference between you and the richer man is the way you think
about money.
Whole
books have been written about it.
But
if there is a lesson to be learned it would have to be that, we need to shift
our focus away from how much we earn to how much we keep of what we earn.
It
is basic accounting.
Companies
and even individuals' financial health can be distilled to their financial
statements. The key ones being the income statement, a statement of money
coming in and money going out and the balance sheet, a statement of what is
owned, owed and the net worth of the company or individual.
Payday
is a big deal for obvious reasons. We even measure ourselves by how much we
earn compared to our peers. But the other side of the table is the expenses.
Decisions on that side of the table can reduce the highest paid executive to a
pauper by the end of the first week of the month or see the lowliest paid
stretch his pay beyond the next pay day.
In
fact show me your expenses and I can judge your overall financial health.
Income
is good but to ensure long term financial health we need to focus on our
expenses.
To
determine a company's long term financial health the income statement is useful
but the balance sheet is critical.
A
strong balance sheet with a huge asset base compared to liabilities ensures
viability into the future the opposite means you will be scrapping through life
rather than sliding through.
Good
assets should throw off more income or at worst can be sold off in times of
need. The assets are built using our expenses.
"The richer among us have their expenditure slanted more towards investment than consumption. They are ever eager to convert income into assets -- land, business, stocks or bonds. The poorer among us ---regardless of our income are just as keen, even keener to consume our income in clothing, good living and trips abroad...
The
difference between the two companies or people is their way of thinking.
The
rich think money is for making more money. Inevitably as they make more
money their standard of living rises and they can afford the fabulous clothing,
good living and trips abroad. The poor among us think that money is for
spending -- "what is the point of making the money if we cannot enjoy
it".
The
thinking of the two is a different as night and day, is it any surprise that
the results are opposite?
We
are a poor country because we have a poor mindset. Our leaders are not immune
to our poor thinking and therefore make decisions that keep us in poverty.
Richer
countries have a critical mass of rich thinkers that through their rich actions
carry everyone along.
So
in the new year let us aspire to rich thinking, shift our focus to our
individual and national balance sheets from our income statement.
For
God and my country.
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