TAKING ADVANTAGE OF SALES

The key to being wealthy is planning ahead. Planning ahead is also known as foresight. Foresight is an attribute of the frugal. It is a wise course of action to look ahead. It is also wise to have a system in place. A system is the balance between unity and plurality. All successful things are based upon the principle of systems. Thinking in systematic terms is complex thinking. The unwise think simply and suffer accordingly.

Planning ahead means that actions taken are purposeful. Actions taken are by design. Those who do not plan ahead actions are on the spur of the moment without any forethought. Results correspond to the amount of thought put into an action. Short term thinking will be disastrous in the long term and long term thinking may not be as effective in the short term. However, it is the long term that matters most at the end of the day.

Businesses must be inviting to customers not only for the immediate sale but for the more important repeat sales. A business does not stay in business on one time sales but on repeat business. This is why it is important for businesses to do whatever is necessary to make a customer’s experience in their store worthwhile. Most people are interested in the way things look in the store rather than the prices of the goods.

Only those using lists and knowing the prices of goods have prepared in advance to get out of the store and keep in budget. These individual’s names are not legion but few and far between. One of the inviting items of businesses is to provide incentives. One incentive is to put certain items on sales. The frugal love to buy sale items. When items are on sale, it is a good time to stock up with as many sale items as is practicable.

For instance, Kroger is having what they call a Mega Event Sale. If you purchase ten items that have been designated as Mega Event Sale items, then you will get $5 off the purchase. This means that you save .$50 on the purchase of each item. Kroger is running a special on Starbucks Coffee for $6.99. The same coffee sells at Walmart for $8.34. By purchasing 10 bags of Starbucks, the price drops to $6.49. The savings is $19.98 from purchasing the same quantity from Walmart. This is your classic no thinker.

Now that you have saved $19.98, you can use this savings to spend on something else. This is what is important about saving money on purchases. Most people never consider these things because they do not think about such things. They are too busy talking on their cell phones to be concerned with the price of the items they are purchasing, so they end up overspending. They do not like to think. This is why they are perpetually talking on the phone. They do not want to be alone with their thoughts because there are no thoughts.

HAVING PLENTY

There are two ways to go through life. One is having plenty and the other is always being in want. Wealth and poverty are opposed to each other. Wealth and poverty are relative in that there are degrees of each. Wealth is to be desired over poverty at each level. Having an abundance of necessities is good and the opposite is also true. When someone is lacking an abundance of necessities, they need to find out why it is that way.

The reason that people are in poverty is that they do not understand how to be wealthy. This is obvious. People in poverty lack understanding of the way things work. Thus, their situation is self perpetuating. Parents do not teach their children any financial skills because they have nothing to pass on in the way of knowledge. People in poverty are unsuccessful financially. All that they can pass on is how to fail.

Wealth is associated with life and poverty with death. This is why it is important to further life by generating wealth. Wealth is good and poverty is bad. Securing an income is essential in building wealth and having plenty. However, just having an income is not enough. Income is to be used to buy goods and services that are essential to life. Securing an income presupposes being productive. Gainful employment is the foundation of wealth building.

Production is the world of activity. The main reason that people are in poverty is because they are lazy. Poverty stricken people do not like to labor. They hate work with all their heart and then they wonder why they cannot get ahead. They blame it on the man or the system rather than looking within why they are lazy. To secure themselves a living, they will seek to have the civil government stick the gun in the belly of the productive and force them to pay their earnings to the indolent.

These indolent have no sense of pride in themselves. While they may be able to survive, it is a meager existence. It is really a subhuman existence. There whole life is wrapped up in living hand to mouth. This is a miserable state. Those who are ambitious are able to direct their lives into life sustaining paths. They live in a high state. They are living above the minimal. They have more options in life and are able to enjoy the good things of life.

The diligent can choose what they want to eat, not be at the mercy of whatever is available. The diligent can look in the freezer or refrigerator and choose steak, chicken, fish, salad, hamburger etc. for dinner. The lazy do not have this advantage. They do not have the ability to choose. The frugal are well stocked up in foodstuffs. They have used a list when going grocery shopping because they have planned ahead what meals they are having that week. Those in poverty do not have this ability because, they do not plan ahead. They are incapable of forming plans. This is why they are in and will remain in poverty.

INCREASING NET WORTH

Understanding some accounting principles will be beneficial in making sound financial decisions. One does not need to be an accountant to make good financial decisions, but understanding the way that financial statements work will help in analyzing the current financial condition of an individual or business. It is essential in making economic calculations. Running a household is no different conceptually than running a business. Both have inflows and outflows. The key to success is to ensure that the outflows do not exceed the inflows. This is the role of good record keeping.

Financial statements capture historical data. They show if a household or a business has been successful in managing their resources. To sustain viability, the household or business should be seeking to increase its equity position. This equity position or net worth is calculated by taking the assets minus the liabilities. This leaves a residual known as net worth or equity. This residual shows how much ownership of the assets a household or business has.

Net worth or equity has to do with ownership. This ownership position should be increasing on a monthly basis. The only way that this can take place is to have a stream of income and then control spending, so that income exceeds expenses. This will, by definition, leave a surplus. This is the way to the accumulation of wealth. This also demonstrates successful financial management.

Financial management includes the production process i.e. the gaining of income. This whole process has to be properly managed and controlled to have success. When someone does not know where their money goes, they are headed for disaster. Keeping accurate financial records can never be stressed enough. All income and expenses must be accounted for. There is no way to know what one owns without objective proof.

When making a large purchase such as a home, most people do not have the resources available to purchase it outright, so they make monthly payments. With every months payment on a mortgage, the purchasers equity will be increasing that is, their ownership of that home. The same is true of any other asset. The net worth increases when liabilities or debts decrease. The result of increasing net worth is ownership and ownership means that one has been financially successful.

Increasing net worth is the same thing as increasing wealth. Wealth is objectively proved by the things that you own. We need material products to take care of our physical needs. Wealth, thus sustains our physical life. However, this is understood spiritually. Net worth is conceptual in that it has to do with the ownership of life sustaining objects. An increasing net worth is essential in being able to meet future needs.

GETTING AHEAD

There is no getting around the fact that we are going to incur costs in our daily living. Sometimes those costs are not planned for. For example, a lady who attends the church where I pastor had her transmission go out on her. Anyone that has had a transmission worked on knows how expensive this is to repair. It is an unexpected expense. It is not something that you can plan specifically for because we obviously do not know the future.

Sometimes it seems hard to get ahead when our costs rise to repair broken items. It seems that something is always breaking down. Break downs are inevitable. What we have to realize is that we are on this earth temporarily. This is not a permanent stay and nothing lasts forever here. Thus, we should anticipate that we are going to have repairs and have to replace worn out items. We should expect it rather than be surprised by it.

The key to getting ahead despite these unforeseen expenses is to establish an emergency fund. Emergency funds also cover the inevitability of job losses. Most people do not have a job that they keep for thirty years, retire and get their gold watch. In our day and age, this rarely happens. Competition is such that industries are changing. What looked as though it would be a going concern for years and years suddenly disappears and people are having to look for work. Also, government intervention into the market assures that people will lose their jobs.

It is hard to get ahead with a job loss. Most financial planners recommend keeping 6 months of monthly expenses in an emergency fund. This will give you a cushion until another job can be found. One financial planner recommends putting 60% in savings, 20% in an emergency fund, and the other 20% in a discretionary spending account of money that is being budgeted for savings. The only way to establish an emergency fund is to spend less than you earn.

By systematically adding to your emergency fund on a monthly basis, any unforseen event will not be a stressful one. When people do not prepare for the future and its inevitable unexpected expenses, they are put into a stressful situation of not knowing what to do and will go to the government to seek assistance. They become a charity case. It used to be a shame to be on assistance, but not anymore. Lack of preparation for the future is the norm, not the exception.

The frugal realize that unforseen expenses are going to happen and they are prepared for them when they occur. They do not get stressed out because they know that they should have adequate funds to cover these costs because they have been preparing for it. The key to all financial planning is foresight. Looking ahead to the future and preparing for it puts the frugal in the upper class. Those who do not prepare for it will find themselves having to beg.