Gathering your resources?
These are troubling times, there has been before and there will be again, and when there is trouble it is time to gather your resources as they are your stored strength that can see you through the worst of times. There are three different strategies to using the resources that exist in your life, you can first feast and then the fast which is the way to happiness, being forced to fast before the feast is suffering whilst just fasting or feasting is the path to death, in theory there is a fourth, eating exactly the same everyday but that is a fast of excitement which is equally deadly to the soul and people just can not cope with it. Even in untroubled times we are creatures of cycles, our needs and wants rise and fall with our moods, the moon and sheer randomness, ignoring them is to have a reckless disregard for our happiness and healthiness, our needs change and we need to be aware of them and response to them as our resources are always limited and they prepare us for when the world has it's own cycles.
Sadly our world sometimes we forces us into periods of fasting against our will, of not just food, but all the resources that we have become use to having a surplus of, heating for our homes, clothes, a night in the pub, coffee with a friend, a nice haircut, the little things that make life better and more joyful. There is nothing wrong with enjoying these things, I have done so myself, the tricky thing is when you become attached to them, when you feel that you have a right to them, that they are part of your identity, when you lose your flexibility and you become a person who gets coffee, massages, who have the highest luxury in make-up, tools, chocolate flown in from South American (decorated in gold leaf, of course). These things and activities are not who you are, they are what you do, divide and rule, separate the two, you are who you are, hold on to that and let everything else go as mere circumstances, they are the stage upon which you live and you can play many roles.
As when an enforced fast begins it makes it easier to know what you can let go of, what is not essential and if you have to give up part of yourself it makes it hard to be coldly rational about your choices, you have to grieve that part of your identity and it is hard not to take these thing personal but it is necessary to protect yourself at these difficult times and to regain a sense of surplus in your life. It is at the margins that the difference between happiness and suffering emerges, if you have enough and a little extra that is your safety and security for the future, when you are spending more than you have that is hopelessness because you are burning through your reserves and heading towards bankruptcy. It is all relative, the acutal income you have is not important, just whether is it more or less than your spending, even if you earn ten million dollars, if you are spending twenty, you are going to run out quickly.
Which I hope means as it is relative, that we all have the ability to gain a surplus, and an excess of income is the only way to get ahead, to pay yourself, your future self, not your running cost but to give yourself an income independent of your labour, and it is easier to pay yourself first at the beginning of the month as it sets your intentions to care for yourself and money has a habit of disappearing if you do not give it a task to do. That little extra is important, as a little can become a lot if you can keep it going for long enough, just a hundred dollars a month can grow into a million dollars given enough time and you do not even have to save that much, every ten thousand dollars can give you an income of 40 dollars a month, that can be significant especially when you are on a lower incomes, and if you are a higher earner you have the opportunity to save much more.
The exact figures do not matter so much as the principle that filling the piggy bank get you to a better place rather than borrowing from it, if you can get a little ahead you will win the race in the end. Where are we running towards is a place where we have assets that pay us an income that is more than our cost of living, that is what a pension is, but they are not the only asset that pays us an income, there is the stocks and shares, bonds, property.
It is worth noting that there is no difference between something that pays us an income and a tool that saves us spending, the equation is income generating assets that are greater than our cost of living, and reducing that cost is just as powerful as having more assets, if not more so, when we reduce our costs, we give ourselves more income to put into assets, and the returns on tools that save money can be massive. A hair clipper or a friend with a pair of scissors, can save you twenty dollars a month on hair cuts that is the same as having five thousand dollars in assets paying you twenty dollars a month. That is 40 dollar hair clipper earning you 240 dollars a year, every year for ten years, that is a great investment (as long as that money goes into buying assets rather than other spending!).
That is the power of saving money by reducing costs, which is why you need to be aware of what you are spending first, which strangely a lot of people find this boring, as if there is something better to do than looking at spreadsheets. It is equally odd that banks make it so hard to keep track of what you are spending, it is almost as if they make money from people overspending and going into their overdraft, you might hate tracking your expenses, but hopefully you hate the banks winning more.
Whilst it is true that the more awareness you have of what you are spending gives you more control over how you spend it, there is a simple system for those who don't, have two accounts, one you get paid into and pay out your monthly and yearly bills out of, then a second that you can spend on daily costs, and into which you pay yourself an allowance for these things (if you have surplus income to pay yourself first, do so out of the first account, that money goes into a tax free investment account). The second accounts is for all your variables costs, food, coffee, entertainment, that way you know exactly what you have left at any point in the month, which is easier and more realistic than line accounting, we all suddenly become really efficient in our spending when we have to make twenty dollars last for the last three days before payday!
Of course, the greater the amount of information you have the better, you can notice trends in your spending, if you are drinking coffee everyday, a five dollar coffee becomes a hundred and fifty dollars a month. There is no right answer as to whether that is too much money to be spending, if it only one percent of your income, it is barely worth worrying about, if it is ten percent, then it is worth considering what you are getting out of it, it could be that you are meeting friends everyday and it means that you walk for an hour everyday to do so, that sounds worthwhile to me, but if you barely notice it as you dash from here to three with a take-away then it probably a waste. It is your money there are no perfect way to spend your money except to maximise your enjoyment of it, and we do that by being aware of where it is going, like the Sheppard who has a hundred sheep and worries about the missing one will continue to have a hundred sheep, whilst the one who don't ends up with none.
As it is with sheep so it is with money, it's only use is to be consumed as goods now or later, there are no other uses for it, when we invest it is only so that we have more money later for consumption (normal savings is only spending it later if it does not earn interest or dividends, saving for a holiday is not an investment!), and the amount of knowledge you need for investing is proportional to how much money you have, getting five percent rather than four percent returns only matter on a hundred thousand dollars where it is a thousand dollar difference rather than a hundred dollar where it is only a one dollar difference (not that this is financial advice but find out about Vanguard whole market funds if you are interested in investing). As such what matters is how much consumption can you get out of your money, and one of the best ways to add value to that consumption is by skill.
A great chef can turn affordable ingredients into feasts with their knowledge and experience, they are use to getting the most out of their variable costs, give them a chicken and they are using every part of it they can, they are making their own stocks (the wet kind), bread, pasta. Their knowledge increases the value of those ingredients, they get more out of them, and you can learn from them, every meal has a YouTube video that will tell you how to make it, how to do it cheaper without losing any taste if not improve it, there are lessons on batch cooking, how to understand favours.
If you love food, it should be obvious how our knowledge makes food tastes better, our appreciation increases, this is something that you will never learn from a take-away, it takes time and effort, but get to develop a real skill that saves you money and improves your life. The same is true for every other aspect of your life, you can learn to improve your home, car or bicycle maintenance, how to dress (which means you buy less but better clothes), there are no end to what you can learnt, and it is even possible to start earning money from new skills.
We all have a flow of resources that passes through our lives, it is up to you to care for them, to use them as efficiently as possible, you can choose not to but I can think of no reason to except if you are not aware of the choices you are making. If you have the opportunity to pay yourself first, why would you not take it, it is the most caring thing you can do for your future self, it gives you the most options, it increases your life chances and builds a stronghold to protect you from future uncertainty. The world changes, you can not predict how but having resources is always the best insurance that you can have, the chance to protect yourself without having to rely on others is the greatest asset that you can have, except for yourself, so gather your resources for the battle that is life, even if you never have to fight it, it is better to dress for war and then enjoy peace, rather than the opposite way round.
