A friend of mine once told me a story of someone who rented the second floor of a beautiful building. The man, who is well-dressed, and is the driver of a fancy car, lived with his family in some well-nourished rooms on the floor. In most of the cases, here in Somalia, a broker performs the renting procedure, so, later, possibly after one month, you see the owner of the house. One day, the man, while standing at the balcony, saw a very humble-looking man standing down at the ground, looking upward to him (the tenant) and uttering some words. The tenant said, “God help you, man” assuming he is a beggar.” I am the owner of the house, pay the rent”, replied the other man. He was shocked and embarrassed not only that he called him a beggar, but also the simplicity of the life he was running while he was extremely rich.
The story is a typical example of “Looking Rich VS. Being Rich “which David Bach elaborated in his book “The Automatic Millionaire”. David, as financial advisor, meets different classes of people, some of them driving a brand-new car, wearing a gold Rolex watch, and appearing to be insanely rich. When looked into their statements, they are really broke, with millions of dollars in debt. As David meets clients who are less impressive, but have a smile on their face and several houses of their own.
It is speculated that Warren Buffett, the American megarich, had been using a $20 flip phone until not that long ago, and the Africa’ richest man, Aliko Dangote is said to be very humble, goes alone, and follows a simple life. He once said to a female journalist, that her life is more expensive to run than his. According to him “no condition is permanent” in this world, so it is better to stay humble.
The simplicity of our life has a lot to do with our spending and where our hard-earned money goes. Are we sacrificing our financial autonomy and future welfare for a temporary enjoyment?
It is true that life likes enjoyment; a luxury car, an expensive rented house, espresso at a fancy hotel with an old friend, yah, compromising to buy an overpriced meal because the money is for you. If you don’t use it then who?
Money perhaps needs much care and consideration. It will never accumulate unless we pay some sacrifice. I once heard that if the wealth of the whole world is distributed evenly, the money will find its way to the pockets of those who made it originally. This is possibly true because the money will circulate and circulate until it lands someone who keeps it for a perfect moment.
Most of us are striving to earn more. The problem, as experts say, is not how much we earn. It is how much we spend. The more we earn, the more we spend. It is also said every additional penny, without a plan, will be added to our expenses. The mutual influence between earning and spending creates a downward spiral, or what David calls an unwinnable race which goes like “Go to work…make money…spend money…go to work… make money… spend money…. go to work…
This unwinnable race is incredibly vicious and can lead to a real financial insecurity. It is an unwanted situation that we all should strive to avoid by making wise financial decisions.
One advice that most financial experts provide is to pay yourself. Decide a percentage of money that would be deducted, before anything else, from your paycheck and sent to your savings account or to an investment account. It could be any amount from 5% to 20%. More than that is even great. In this way, your savings increases with your salary increase. For example, if you save 20% from your salary, the savings of $1000 is $200, $1500, $300, and $2000, $400. It increases with the income increase.
Financial experts also advise that we should save from all earnings, not necessarily from paychecks. You went on a sponsored trip, save the money you used to buy the fuel. Lunch is offered after the meeting, save your daily spending for lunch. $5 received from a wedding you attended. Send it online to your savings account.
A piece of advice I read from a text a quite long time ago helped a lot. it goes like don’t allow someone to fool you for not paying your money. ” In supermarkets or shopping centers, you see those people scolding you “your hand is tight”, “you stick too much to the money”. It is true, I stick to it because I made it hard.
In a nutshell, we want to live a good and fulfilling life, we have to rectify our lifestyle. There is a big difference between looking rich and being rich. It is better we work on our saving habits. We need more saving as we need more earning. It is often advised to have a constant percentage of money allotted for saving.
Dr.Ismail Mohamed Ali, Senior Lecturer and Editor, Somali Business Review, SIMAD University
