Archive | August 2015

A glass of borrowed water

Glass of water

I am given a glass of water in the morning. I drink my glass at once – not planning for later. Later in the day I get thirsty because I finished all my water in the morning. I decide to walk over to my neighbour and ask if I can have some of his glass of water that was also given to him in the morning. He says yes, but only if I promise to give it back tomorrow. I take a quarter of his glass of water and drink it to quench my thirst.

The next morning I am handed my daily glass of water again. I remember that I owe my neighbour a quarter of my glass and quickly give it back to him. I now have only three quarters of my glass of water for the day. I drink half of it and the other half later the day but remain thirsty because I didn’t have a full glass to start with. I decide to ask my neighbour again. He agrees to give me a quarter of his glass but wants half a glass in return – to make up for his discomfort for sharing with me. I agree and quickly drink the quarter glass of water he gave me. Now I’ve had my full glass for the day but owe half a glass already on tomorrow’s issue.

The next day I get my glass of water, give back half to my neighbour and am very thirsty by noon. You can see where this is going, right? The point is that we need to teach our children, very early in their lives, not to spend what we don’t have because it lands us in trouble. If we need more than what we have available, we need to be innovative and resourceful to channel more of what we need into our direction. We could become the neighbour who has more water available to those who ran out because he invested in a reservoir tank and collected rain water for later use. He planned ahead.

This simple analogy is the most basic form of financial management: Don’t spend what you don’t have because in time it spirals out of control. It comes in many forms in our day and age, but the worst enemy is consumer debt in the likes of credit cards, clothing accounts, revolving loans, car financing schemes (to make it affordable right now) and micro loans (when you’re really in dire straits). These things combined will gulp up three quarters of your daily glass of water, leaving you to slowly commit financial suicide. This evil of instant gratification – to want something right now even if you can’t afford it – is what ruins individuals, families, corporations and even countries in our day and age.