Issue 23 of Regenerate Our Culture magazine holds a lot of fun stuff on economy, economics, taxes, and other matters pertaining to money and the management thereof - check it out if you have the time:
ROCHowever, what I wanted to take the time to comment on is the article by
Seth D. Willard -
Penny Wise, Dollar Wise.I fear that many people will read Willard's article and will never really realize or appreciate the whole value of his approach to spending and saving. Many people, young(er) and old(er) will read it and say, "Yeah...yeah....that's right..." and the reality of what it means to them when they pull out their wallet will totally go in one ear and out the other.
I've seen it happen, - many times. And that's why I'm taking the time to reinforce, if I can, to repeat, to highlight and underline, the principles that he brought forth.
I had to smile while reading Willard's article, because my own upbringing and dealings with money and family were (are) so very similar to his. He's a young man from Minnesota,
homeschooled, well acquainted with country life, and he's also on the right track with his pocketbook.
There's a reason why I'm being so serious about this. Statistics are giving a rather clear picture of a rather clear problem with today's spenders. In 2005 American households saved an average of negative .5%, and in 2006 that figure has slipped further, with savings standing at negative 1% of after-tax income. In other words, more is going out the door than is coming in.
The United States has not seen negative savings of this kind since the Great Depression. And it's not because there isn't enough money being earned. It is, simply, because there is not enough money being saved, or rather, too much money being spent.
(So keep this in mind, because your local bank really does appreciate the money people put in savings accounts - even if they're not showing it.)
Let me develop a bit: Money is nothing more than a currency. And a currency is nothing more than a spending commodity. It stands as a medium with which we can universally receive wages and convert them into a more tangible form of wealth. Money, in and of itself, doesn't do much for us. We can't eat it, wear it, live in it, or any of the other necessities of life. This is where the concept of purchasing comes in - we can exchange money for goods, and goods for money, and we convert tangible items into money, and money into directly tangible items.
Properly managing a spending commodity is obviously a skill that's being lost by the handlers of today's money. It's not because it's such a complicated skill to learn either, in fact, it's such an uncomplicated thing that most people totally miss the rudimentary points of how to flip a coin and go on to rant about the economy and the politicians.
Let me make this concept very simple: Money management is composed of two factors- Saving, and Spending. Actually, we'll make that three - Earning, Saving, and Spending.
Earning is converting your labor into wages. You now have a spending commodity.
Saving is saving. Savings are the part of your wages that you don't spend.
Spending is converting your spending commodity into a less fluid, more tangible form.
The Point of Saving.Saving, is simply, not spending. So what's the point of 'not spending' a 'spending commodity'?
Let me put this in a very practical, mechanical perspective. My 1995 Ford F350
Powerstroke is having a problem right now (nothing unusual for a Ford I know) that is pretty much the same problem that today's money handlers have. When that diesel is running, it's gotta do some saving if it's going to start the next time - that's what the alternator's job is. It charges the batteries when the engine is running, as well as supplying all the services with a 12V current. Problem is, right now, due to a regulating diode being out, it's not charging the batteries. So every time I start, the batteries get weaker, until there's nothing left. Simply put, that's what Americans today are doing with a savings rate of negative 1%.
That's the very basic reason for saving. Without it, you'll be one of those [
d]river [r]eturns [o]n [f]oot, [
f]ound [o]n [r]oad [d]ead Fords.
There are more reasons why saving is a great thing. Let me tell you about this young fellow I know: Like Seth Willard, he was
homeschooled, grew up working with dirt and bugs and chickens. He grew up working with his dad, and as soon as he had a few pennies to rub together, he started saving. At sixteen he assumed a full-time administrative position in the family business, and he continued to save. Not long ago, at the age of nineteen, he purchased a fifty acre farm. And people wondered,
'How'd that happen'?The Point of Spending.
Whichever way you cut the cake, we ultimately save so we can spend. Spending is the fine art of converting our hard-earned money back into tangible forms. We will always need food, or clothing, or transportation, or a home. The problem is that this conversion, though it is as easy as clicking a button or swiping a card, has become ultimate hole in the pocket for today's money handlers. The money is being converted into things that disappear, into things that are worth a fortune today and nothing tomorrow.
And then they wonder where the money went. They can't make ends meet. They're in debt because they spent more than they earned, and they spent it on -they can't even remember what, at least there's nothing much to show for it.
Wherefore do ye spend money for that which is not bread? and your labour for that which satisfieth not? (Isaiah 55:2)
And they'll read Seth Willard's article and say, "Yeah... yeah...that's right. Wish I had some money to save".
If that's you, listen up, because I'm going to give you a few secrets on how to make this conversion of cash into cow the
most efficient, not the least efficient link in the chain. It's not hard, it's not complicated, and it's not magic. It's all about common sense and common cents. Penny wise, dollar wise.
Wise spending is the exchange of money for something of equal value. When you get a
paycheque, take a look at it and think of how much that money is worth. If you leave it in the bank (in the right kind of account) it will hold that value. Question is, when this money gets converted into some form of equity(spent), will the value of that equity hold? Is it worth it, to spend this money? (What happens to chips and candy?)
If you're reading this, and if you're someone who handles money, I'm giving you a challenge. If you're a working man, and if you meet this challenge, I'm guaranteeing you that five years from today, you will own your own home.
Here's the challenge: Every time you dig in your pocket, every time you pull out your wallet, ask yourself this question:
What will the retained value of this conversion be? Will it simply disappear, or will it be useful for years to come? And if that's not enough, do recall the words,
A fool and his money are easily parted.You see, the overspending that we see today is not simply spending too much. It is simply the sum total of a year's
useless expenditures. It's the money that's frittered away, hither and thither, and at the end, you have nothing to show for it. (Except some debts.)
Your money will disappear, but you're the one who determines whether the value of it disappears. You
can retain the value of your
paycheque - first by wisely saving, and then by wisely spending.
Cost of living included. If your lifestyle isn't worth what it's costing you, time to make some changes.
Moreover it is required in stewards, that a man be found faithful. (1Corinthians 4:2)
So... what was your last purchase worth?
Labels: economics, money matters