Economics boils down to one word, choice. We all face a world of choice. The key is making the right choice. Making right choices allows us to be satisfied with those choices. Making right choices allows one to sleep at night. Choices will be based upon two premises. One premise is too make choices randomly, and the other is to make choices based upon principle. One leads in one direction and the other leads in the opposite direction.
When it comes to choice, one has to realize that choice is limited. We have more choices than we do budget. There are limits to the amount of money that we can spend. The principle is always the same that, if you want to be wealthy, you must spend less than you earn. This principle is never taught in school, yet it is the heart of the market system. Those who save money are the key to the capitalistic system. They provide the necessary capital that will fund future economic growth.
Savers are future oriented. They are a small minority. The vast majority of people are present oriented and they demonstrate this daily by their choices. The saver saves his income systematically and at a set rate, such as 10%. Combined with interest, the saver will have a surplus for the future. The present oriented person does not save and spends all that he earns and when an emergency occurs he is left with nothing. So he turns to the government to steal from the saver. The present oriented person is a thief at heart and in the voting booth. He votes himself an income from the productive.
Those who understand limitations are wise. It is those who do not understand these limitations that are dolts. The wise plan their income and expenses. The wise realize that they must secure a living and control their expenses. One way to control expenses is through the concept of substitution. When something rises in price, it wise to find an alternative that is lower in price. This requires an individual to be aware of prices.
Take for example steak. A few years ago, you could purchase T-Bone Steak for $3.99 a pound. Now, T-Bone Steaks sell for $5.99 a pound on sale. Even though I could afford to buy steak at $5.99 a pound, I choose not to. To me it is overpriced and I refuse to pay their price. As I say, they are proud of their steak and they are going to keep it. They will sell it because most people see steak and they buy it without considering an alternative. There is no thought process in their choice.
This week, Kroger is selling Sirloin Tip Roast for $1.99 a pound. It comes in a 12-14 lb. package. You can ask the butcher to cut it into three roasts. While it may not be a steak, a roast in my mind is satisfactory, especially the price. I am saving $4.00 a pound. If I bought 14lbs of steak, it would cost me $83.86 plus sales tax of 8.25%. 14lbs of roast costs me $27.86 plus sales tax. In this case, by buying roast instead of steak, I end up saving $60.62. If you are interested in saving money, buy roast instead of steak.
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