It is easy to spend money than to earn it. In today’s world where wants are growing tremendously than needs, it is often tempting to spend money on unnecessary items especially on impulse or peer pressure. Things like credit cards allow you to spend before you earn the money. If the usage is left unchecked, calamity is unavoidable. Financial wisdom is needed so that you do not fall into a debt trap and become a financial prisoner. That is why it is essential to learn from a wisdom nugget by the great American statesman and philosopher Thomas Jefferson.
Investment and earnings should precede spending in order to guarantee financial freedom, otherwise if it goes the other way round you become a financial prisoner without knowing it. Investment and earnings may come in the following forms:
- Provision of Labour/ Expertise
- Provision of services
- Investments in stocks/bonds/ commodities
- Cryptocurrencies
- Inheritances
- Real Estate
- Grants.
Even though you may need to take into consideration future earnings and incorporate them into your financial plans, spending while falling back on unrealized earnings can be a recipe for disaster if the anticipated earnings fail to come at the expected time. That is why it is wise to wait until you have a tangible guarantee of owning such funds.
“Never count the chickens before they hatch.”
In the event that things do not go according to your expectations, tears are inevitable as one can incur big losses. Losses may come in the form of debt interests, assets repossession, failed business deals or being summoned to the courts over failure to honor financial obligations. If it is not yet within your control, then it can get out of control, and they may be little to nothing you may do. It may be like sinking in quicksand while your hands are tired. Therefore, never spend before you earn.
The Golden Rule
For example, the money in a bank is not yet yours until you have earned it. Once you earn it for example in the form of a payment for services rendered and it is deposited in your bank account, then it is rightfully yours. Only after that can you visit the bank and claim it as yours.