Authors: Steve Shipside
The Way to Wealth (5 page)
Whoever thought taxes were the only sure-fire outgoing in life clearly hadn’t tried to keep a roof over their head, let alone a car on the road. Benjamin Franklin was far closer to the truth when he observed that
‘gain may be temporary and uncertain, but ever while you live, expense is constant and certain’.
Contrary to common wisdom (and to one of Franklin’s other statements—check out the Defining Idea) death and taxes aren’t the only sure things in life nowadays. As luck would have it, there are shedloads of expenses that are coming your way as sure as eggs is eggs.
DEFINING IDEA
…Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
~
BENJAMIN FRANKLIN
We all know that. If we think back we all know that in any given year there will be at least one major repair or replacement bill for plumbing or something electrical or automotive, and yet every time it happens we throw up our hands in despair and wonder where on earth we’re going to find the money. Chances are, it’s the credit card that takes the strain and then surreptitiously siphons the money out of your life with monthly payments. Nor are businesses immune. Every business suffers ‘unexpected’ expenses on an annual basis with technology that needs replacing, outgoings on premises or the cost of financing fallow periods.
So how about budgeting for those entirely predictable ‘unexpected’ expenses?
Start off by taking an honest look over your figures for the last few years. Don’t have figures? Well, there’s your problem for a start. If you don’t have a household budget then being surprised by entirely predictable expenses must be pretty much a way of life round your way. If we’re talking about a business here, and you don’t have figures, then I can only presume that you’re reading this from behind bars or on a yacht in the Bahamas since the tax authorities don’t look kindly on insouciance when it comes to spreadsheets.
The chances are that you can identify a pattern of expenses for which it would make sense to have a financial buffer ready. Now you’ll need to find the money. So identify your annual target sum and break it down into monthly, or even weekly, contributions. Breaking saving sums into weekly contributions has two benefits: it makes them more accessible and makes you realise just how long it takes to save up enough for a ‘fighting fund’ for the unexpected. If you really want to balance your books, this is the time to look at your weekly outgoings and see where you could trim the expenses to create those savings. This could mean doing something as simple as cutting out a few luxuries from the weekly food basket. Think of that the next time you’re staring down the business end of a chocolate doughnut. Your physical health could even benefit as well…
HERE’S AN IDEA FOR YOU
…Create a fighting fund for the expected unexpected. You can get a decent rate of interest by opening a saver account with a relatively small amount and still get instant access. Can you spare that small amount right now? If the answer is ‘yes’, what are you waiting for?
Franklin was no fan of finery. He believed in sticking to the basics as he made clear when observing that ‘
Many a one, for the sake of finery on the back, have gone with a hungry belly, and half starved their families’.
‘Many a mickle makes a muckle’, as my Granny always said. There again, Gran also used to tell me that witches used empty eggshells as boats in order to sink sailors’ ships, so I don’t think she’s going to be writing a lot of business self-help books any time soon.
DEFINING IDEA
…From little acorns mighty oaks do grow.
~
PROVERB
The idea that little things add up is certainly not new, and Benjamin Franklin really warmed to his task when it came to warning about the accumulating costs of small expenses. ‘You may think perhaps that a little tea, or a little punch now and then, diet a little more costly, clothes a little finer, and a little entertainment now and then, can be no great Matter; but remember what Poor Richard says, many a little makes a mickle, and farther, beware of little expenses; a small leak will sink a great ship.’ The more I think about it the more I notice that Grandma Shipside and Benjamin share a remarkable number of common interests (let alone vocabulary).
History hasn’t been kind to the frugal over the last half century or so. Those brought up in wartime or with rationing need no telling about the need for tightening belts. Those of us brought up since then have tended to rebel against the attitudes of earlier generations, swapped ‘frugal’ for ‘penny-pinching’ and enjoyed almost unfettered spending—but with that freedom has come a general loss of awareness of the cost of small things. The ‘price of a pint’ (of milk) test is a celebrated way of testing just how out of touch celebrities are, but you don’t have to be a rock star to fail the test; most of us don’t really add up what we spend on the little things in life.
There is a strong argument that it really is the small leaks that harm small businesses. That’s because they have a tendency to pass unnoticed, whereas major expenses are carefully scrutinized and weighed up. When was the last time you really counted up what you spent in a week on all those little daily expenses and indulgences? Do you know exactly what your journey to work costs in petrol? I’ll bet you haven’t a clue. What about how much per week you spend on cappuccino, chocolate bars or sandwiches? What about those petty cash outgoings, especially the really little ones? Office coffee, tea, milk (see, told you it’s not just rock stars who should take the test)? Printer toner? Copier paper? Add it all up and you’ll have a muckle or two, I’ll warrant. You really do need to get a grip on these things, and you need to do so now.
HERE’S AN IDEA FOR YOU
…Spend a week recording your daily spend. Break it down into transport, food, etc. Multiply upwards to see what you spend a year on each category. Add tax at the appropriate percentage, and see how much you must earn to pay for them…then look at what you could save by opting for cheaper alternatives.
Franklin knew all about consumerism:
‘when you have bought one fine thing you must buy ten more, that your appearance may be all of a piece.’
To which his reply, or, strictly speaking, that of his character Poor Dick, is to observe that
‘…’tis easier to suppress the first desire than to satisfy all that follow it’.
This is actually the seed from which the whole downshifting ethos springs. Have you considered that real wealth may come by rejecting the pursuit of money altogether, or at least toning down its role in your life? While Franklin didn’t specifically discuss downsizing, he certainly touched on the idea at its core.
DEFINING IDEA
…Ridiculous yachts and private planes and big limousines won’t make people enjoy life more, and it sends out terrible messages to the people who work for them…it’s about getting a balance.
~
RICHARD BRANSON
All too often consumerism becomes a form of financial arms race with your peers. Let’s face it, did you really aspire to this year’s model of car back when none of your friends had a car at all? Keeping up with the Joneses is seen as a joke, a quintessentially suburban pastime. The sad truth, however, is that while we don’t think we indulge, we are all keeping up with the Joneses to some degree. Whether it’s to gain social acceptance (‘all the other kids have a pony’), to reassure ourselves of success (‘Dad never drove a Jag’) or the more obvious forms of rivalry, we are constantly buying more and more things in an endless escalation.
If you can deconstruct the arms race bit by bit, stripping away the need for the new car or the cruise to Aruba, you eventually get to the point where you realise you don’t need that job at all and could very easily double your leisure time, spend more of it with the kids and breathe fresh air somewhere far away from your curtain-twitching neighbours.
The trick is to be aware that there is a major difference between running towards and running away. If your only real driving motive is fleeing your current life then you’re not even close to being able to realise your dream. You have to carefully consider how you’re going to support yourself (and your family), and how that matches your actual needs.
What’s often forgotten is the fact that your new life must now give you enough personal satisfaction to replace the ego-boosts and backslapping that salary, perks and shiny things provided in your old life. Be realistic about what it is you’re going to do. If your downshifting dreams dwell almost entirely on a pastoral idyll that you’ve never actually experienced then you’re likely to run into some hard facts about your new life and its budget. Moving into an area you don’t really know will also bring risks of resistance from locals who won’t appreciate being appropriated as a backdrop for your fantasies; you’ll need to become part of rural life.
HERE’S AN IDEA FOR YOU
…Instead of running off to become a chicken farmer, why not try to outsource yourself and work part time or freelance? Keeping a foot in the door of your old job while taking a step back is a stretch, but it’s a way of seeing if the new balance suits you.
‘But dost thou love life, then do not squander time, for that’s
the stuff life is made of.’
So goes one of the many exhortations to time saving that pepper
The Way to Wealth
.
Humankind has come up with all sorts of ways of wasting time. Bureaucracy, test cricket, bubblewrap—but nothing, nothing, comes close to the web when it comes to lost hours.
DEFINING IDEA
…I wasted time, and I wasted time, and now doth Time waste me.
~
WILIAM SHAKESPEARE, RICHARD II
One suspects that if Franklin had been forced to face Outlook, Facebook and Stick Man Cricket (you haven’t tried it?) he would have thrown up his hands in horror. Hours and hours of our precious lives seem to disappear in front of screens and keyboards, and often with precious little to show for it.
Some companies have fought back, of course, and Carphone Warehouse even experimented with banning email altogether. Many companies with the technical know-how to implement it have introduced proxy servers delivering a choice selection of Internet Lite rather than give their staff direct access to the distractions of the real deal. Neither of these solutions, however, tends to suit the self-employed person or small-business owner.
Well, there is always self-discipline; impose a single half-hour slot to deal with email at the beginning and end of the working day, and only allow yourself a general surfing break at lunchtime. The problem is that self-discipline tends to be up there with common sense as one of those things that it’s much easier to preach about than to put into practice. Or you could always ignore the problem and go quietly into denial as your life slips gently down the digital drain, sucked away by hours of sifting emails, replying to social networking queries and playing pointless online games (did I mention Stick Man Cricket?).
If self-discipline jusisn’t working for you, then you could come clean, admit you have the work ethic of a child and treat yourself accordingly. There are a number of software packages that allow parents to set up profiles for their kids which limit their Internet access to a certain number of websites and block surfing to unspecified ones. Install one of these and use it to create different log-on profiles with different privileges. One should be your ‘parent’ mode in which you can waste your time on whatever takes your fancy, and one should be your ‘work’ profile which blocks access to anything other than the site(s) you need to access for work. That way, when you sign on for work you can’t be sidetracked into following that hilarious link your friend sent you—or at least not unless you decide to sign out of your work mode, sign back in as yourself and then go and check it out. Because doing all this means actively switching out of work mode to waste time, it should help reinforce the fact that you are now squandering your time (and thus, ultimately, your life).
HERE’S AN IDEA FOR YOU
…Go to
www.download.com
and type in ‘parental control’. You’ll find a hoard of free or free-to-try filters. What you’re looking for is not so much one that handles black (banned) lists but one that handles white lists—approved sites. With an administrator setting and parental controls you can rein in your inner child.