Learn how to save, invest and spend your money.
Planning and controlling consumption are key factor underlying wealth accumulation. Thus, one should expect that PAWs, Like Dr. North at his own time always tame the time to plan all their budgets. Conversely Dr. South has no control over his family’s consumption, other than his household’s income limit.
Operating a household without a budget is a kind to operating a business without a plan, without goals, and equally without direction. The Norths have a budget that calls for them to invest at least one-third of their pretax household income each year.
In fact to be sincere during our research to find out how Dr. North spends his money, We found out that he and his wife invested nearly 40 percent of their annual pretax income.
How were they able to this? In short, they consume at the same level as the average family that earns about one-third as much as they do.
What about the Souths? They consume at the same level as the average household that earns nearly two times more than they do. In fact, their hyperuse of credit is more in line with that of households that earn several million dollars each year.
Here are the questions we asked both doctors.
1. Do you know how much your family spends each year for food, clothing and shelter?
2. Do you spend a lot of time planning your financial future?
3. Are you frugal?
You probably predicted the outcome right!, Dr. South responded with three noes, While Dr. North responded in true PAW fashion, with three yeses. Consider the frugal orientation of Dr. North. He stated emphatically, for instance, that he never bought a suit that was not offered at a discount or a special price.
This is not to suggest that Dr. North is poorly dressed. Nor does he wear cheap suits. Rather, he purchases quality clothing, but not at full price and never on impulse. This behavior was part of his socialization process as a youth.
In my own life as a youth, when I was schooling, my wife taught we had a small income… Even when I was eleven years old, I saved my first $100 from working in a small store, which I engage after school, as my side hustle. It’s only today that the number of zeros change. . . more zeros, but it’s still the same rule, same discipline.
Read also, Meaning and Importance of Personal Finance
You need to take advantage of investment opportunities. . . to do that you really need to involve your self in savings. When you save much you invest much, you have to have something to take advantage of excellent opportunities, it’s always part of my background.
The following are details on how Dr. South spend his income economically.
Clothing : NORTHS PAW $8,700, SOUTH UAW $30,000.
Motor vehicles: NORTHS PAW $12,000, SOUTH UAW $72,200.
Mortgage payments: NORTHS PAW $14, 600, SOUTH UAW $107,000
Club Dues/Fees/Expenses: NORTH PAW $8,000, SOUTH UAW $47,900.
Read How To Build Wealth
I hope you have learnt some tips on how you can plan and make budget of how you can save, invest, and spend your income.