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Spending to Impress – My Vacation is More Expensive Than Yours

Posted on | April 1, 2010 | 3 Comments

Vacation is a time set aside for rest and recreation, a time to relax and relieve stress. For most middle class Nigerians, it is a time to travel abroad, shop till you drop, and return home with excess luggage, more tired than when they set out. The “big boys” travel to the US, UK, Europe etc while others head for South Africa, Ghana, Kenya etc, with precious few heading for our very own Obudu Cattle Ranch, Tinapa, Yankari etc.

Life if meant to be enjoyed, and money was meant to be spent. It makes no sense living poor and dying rich. However, for every activity under the sun, there is a time and season. There is a time to spend, and a time to refrain from spending. There is a time to travel abroad and a time to vacation locally. The crux of the matter is, can you afford it now?

For someone looking for seed capital to invest, start a business or expand your business, does the spending make sense right now?

More often than not, in order to attain financial freedom, you need to delay gratification. The farmer seems to understand this principle more than most. The farmer does not consume his seed. He plants his seed, and eats his harvest, after he has set aside seed for the next planting season. He knows that for the rhythm of seed time and harvest time to continue, he has to preserve his seed.

vacationThe average worker consumes his seed. Every pay day, a seed is put into his hand, and rather than plant, he consumes it on expensive cars, vacations, large screen TVs, other gizmos and adult toys. He believes his paycheck is his harvest, rather than the seed or capital it is. Here in lies the reason why workers are always looking for capital to start a business. They have consumed it without knowing it is their capital they acre consuming. Their capital is tied up in liabilities that cannot move them one inch forward in their journey to financial freedom.

The story of Joseph as Prime Minister in Egypt is a classical illustration of the power of delayed gratification. For seven years, the then world experienced unprecedented economic boom. Folks ate with twelve fingers while Joseph was busy building massive grain silos to store the surpluses. When the seven year boom came to an end, while every one went cap in hand begging for food, Joseph simply opened his massive grain silos and literally fed the world.



To attain financial freedom, we need to have a long term financial plan. You need to know what to do with a financial windfall (bonuses, both the expected and unexpected variety) before it shows up. If you have no plan (you spend as you go), impulse will take over, and you will find yourself looking over the fence at your neighbors, trying to play catch up and overtake. If they went to the UK last summer, you head for the US. Upon return, you make sure everyone knows about it.

If you have a goal which requires money to finance, your best bet is to become your banker, and fund your dreams from your savings. A key advantage of becoming your banker is that since you do not have all the money you think you need, you will be forced to start small, take small risks and make small mistakes which are easy to recover from. If you start a business highly leveraged by a bank loan (at cut throat interest rates), you will be under pressure and may end up making expensive mistakes.

It starts with getting your spending priorities right, focus on assets which will generate enough cash flow to spend on liabilities if you so desire. There is a price to pay for financial freedom. If you do what everyone does, you will get what everyone gets. Your dream holiday can wait, if you your desire for sustainable increase is strong enough. There is a time and season for everything under the sun.

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Category: Personal Finance
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Comments

3 Responses to “Spending to Impress – My Vacation is More Expensive Than Yours”

  1. Sarah
    April 1st, 2010 @ 4:19 pm

    so true, i'm totally inspired by this

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    April 3rd, 2010 @ 7:15 am

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    April 21st, 2010 @ 3:36 am

    Wow this is a great resource.. I’m enjoying it.. good article

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